Correlation Between Ithaca Energy and Alternative Liquidity
Can any of the company-specific risk be diversified away by investing in both Ithaca Energy and Alternative Liquidity 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 Ithaca Energy and Alternative Liquidity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ithaca Energy PLC and Alternative Liquidity, you can compare the effects of market volatilities on Ithaca Energy and Alternative Liquidity 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 Ithaca Energy with a short position of Alternative Liquidity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ithaca Energy and Alternative Liquidity.
Diversification Opportunities for Ithaca Energy and Alternative Liquidity
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ithaca and Alternative is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ithaca Energy PLC and Alternative Liquidity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Liquidity and Ithaca Energy 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 Ithaca Energy PLC are associated (or correlated) with Alternative Liquidity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Liquidity has no effect on the direction of Ithaca Energy i.e., Ithaca Energy and Alternative Liquidity go up and down completely randomly.
Pair Corralation between Ithaca Energy and Alternative Liquidity
Assuming the 90 days trading horizon Ithaca Energy is expected to generate 6.29 times less return on investment than Alternative Liquidity. But when comparing it to its historical volatility, Ithaca Energy PLC is 1.03 times less risky than Alternative Liquidity. It trades about 0.01 of its potential returns per unit of risk. Alternative Liquidity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Alternative Liquidity on November 2, 2024 and sell it today you would earn a total of 0.85 from holding Alternative Liquidity or generate 21.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ithaca Energy PLC vs. Alternative Liquidity
Performance |
| Timeline |
| Ithaca Energy PLC |
| Alternative Liquidity |
Ithaca Energy and Alternative Liquidity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ithaca Energy and Alternative Liquidity
The main advantage of trading using opposite Ithaca Energy and Alternative Liquidity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ithaca Energy position performs unexpectedly, Alternative Liquidity 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 Alternative Liquidity will offset losses from the drop in Alternative Liquidity's long position.| Ithaca Energy vs. Zoom Video Communications | Ithaca Energy vs. International Consolidated Airlines | Ithaca Energy vs. EVS Broadcast Equipment | Ithaca Energy vs. BE Semiconductor Industries |
| Alternative Liquidity vs. Vienna Insurance Group | Alternative Liquidity vs. China Pacific Insurance | Alternative Liquidity vs. Silvercorp Metals | Alternative Liquidity vs. Adriatic Metals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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