Correlation Between Itafos and Intrepid Potash
Can any of the company-specific risk be diversified away by investing in both Itafos and Intrepid Potash 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 Itafos and Intrepid Potash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itafos Inc and Intrepid Potash, you can compare the effects of market volatilities on Itafos and Intrepid Potash 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 Itafos with a short position of Intrepid Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itafos and Intrepid Potash.
Diversification Opportunities for Itafos and Intrepid Potash
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Itafos and Intrepid is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Itafos Inc and Intrepid Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Potash and Itafos 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 Itafos Inc are associated (or correlated) with Intrepid Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Potash has no effect on the direction of Itafos i.e., Itafos and Intrepid Potash go up and down completely randomly.
Pair Corralation between Itafos and Intrepid Potash
Given the investment horizon of 90 days Itafos is expected to generate 3.85 times less return on investment than Intrepid Potash. But when comparing it to its historical volatility, Itafos Inc is 1.26 times less risky than Intrepid Potash. It trades about 0.04 of its potential returns per unit of risk. Intrepid Potash is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,502 in Intrepid Potash on August 31, 2024 and sell it today you would earn a total of 206.00 from holding Intrepid Potash or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itafos Inc vs. Intrepid Potash
Performance |
| Timeline |
| Itafos Inc |
| Intrepid Potash |
Itafos and Intrepid Potash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itafos and Intrepid Potash
The main advantage of trading using opposite Itafos and Intrepid Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itafos position performs unexpectedly, Intrepid Potash 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 Intrepid Potash will offset losses from the drop in Intrepid Potash's long position.| Itafos vs. Danakali | Itafos vs. Intrepid Potash | Itafos vs. Verde Agritech | Itafos vs. Yara International ASA |
| Intrepid Potash vs. The Mosaic | Intrepid Potash vs. Nutrien | Intrepid Potash vs. Corteva | Intrepid Potash vs. FMC Corporation |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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