Correlation Between Information Services and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Information Services and Advanced Micro at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Information Services and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services and Advanced Micro Devices, you can compare the effects of market volatilities on Information Services and Advanced Micro and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Information Services with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Advanced Micro.
Diversification Opportunities for Information Services and Advanced Micro
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Information and Advanced is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Information Services is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Information Services are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Information Services i.e., Information Services and Advanced Micro go up and down completely randomly.
Pair Corralation between Information Services and Advanced Micro
Assuming the 90 days trading horizon Information Services is expected to under-perform the Advanced Micro. But the stock apears to be less risky and, when comparing its historical volatility, Information Services is 1.83 times less risky than Advanced Micro. The stock trades about -0.32 of its potential returns per unit of risk. The Advanced Micro Devices is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,740 in Advanced Micro Devices on September 1, 2024 and sell it today you would lose (132.00) from holding Advanced Micro Devices or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services vs. Advanced Micro Devices
Performance |
| Timeline |
| Information Services |
| Advanced Micro Devices |
Information Services and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Advanced Micro
The main advantage of trading using opposite Information Services and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services position performs unexpectedly, Advanced Micro can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Information Services vs. Baylin Technologies | Information Services vs. Kits Eyecare | Information Services vs. Supremex | Information Services vs. iShares Canadian HYBrid |
| Advanced Micro vs. Reliq Health Technologies | Advanced Micro vs. Information Services | Advanced Micro vs. Jamieson Wellness | Advanced Micro vs. TUT Fitness Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |