Correlation Between Koninklijke Philips and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and International Consolidated 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 Koninklijke Philips and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and International Consolidated Airlines, you can compare the effects of market volatilities on Koninklijke Philips and International Consolidated 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 Koninklijke Philips with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and International Consolidated.
Diversification Opportunities for Koninklijke Philips and International Consolidated
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Koninklijke and International is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Koninklijke Philips 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 Koninklijke Philips NV are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and International Consolidated go up and down completely randomly.
Pair Corralation between Koninklijke Philips and International Consolidated
Assuming the 90 days trading horizon Koninklijke Philips NV is expected to generate 1.24 times more return on investment than International Consolidated. However, Koninklijke Philips is 1.24 times more volatile than International Consolidated Airlines. It trades about 0.07 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.08 per unit of risk. If you would invest 1,196 in Koninklijke Philips NV on September 2, 2024 and sell it today you would earn a total of 1,378 from holding Koninklijke Philips NV or generate 115.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. International Consolidated Air
Performance |
| Timeline |
| Koninklijke Philips |
| International Consolidated |
Koninklijke Philips and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and International Consolidated
The main advantage of trading using opposite Koninklijke Philips and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Koninklijke Philips vs. International Consolidated Airlines | Koninklijke Philips vs. Columbia Sportswear | Koninklijke Philips vs. SINGAPORE AIRLINES | Koninklijke Philips vs. PLAY2CHILL SA ZY |
| International Consolidated vs. ELECTRONIC ARTS | International Consolidated vs. ON SEMICONDUCTOR | International Consolidated vs. Ultra Clean Holdings | International Consolidated vs. Electronic Arts |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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