Correlation Between National Storm and Intergroup
Can any of the company-specific risk be diversified away by investing in both National Storm and Intergroup 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 National Storm and Intergroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storm Recovery and The Intergroup, you can compare the effects of market volatilities on National Storm and Intergroup 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 National Storm with a short position of Intergroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storm and Intergroup.
Diversification Opportunities for National Storm and Intergroup
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Intergroup is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Storm Recovery and The Intergroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intergroup and National Storm 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 National Storm Recovery are associated (or correlated) with Intergroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intergroup has no effect on the direction of National Storm i.e., National Storm and Intergroup go up and down completely randomly.
Pair Corralation between National Storm and Intergroup
Given the investment horizon of 90 days National Storm Recovery is expected to under-perform the Intergroup. In addition to that, National Storm is 6.02 times more volatile than The Intergroup. It trades about -0.34 of its total potential returns per unit of risk. The Intergroup is currently generating about -0.1 per unit of volatility. If you would invest 1,452 in The Intergroup on August 29, 2024 and sell it today you would lose (45.00) from holding The Intergroup or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Storm Recovery vs. The Intergroup
Performance |
| Timeline |
| National Storm Recovery |
| Intergroup |
National Storm and Intergroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storm and Intergroup
The main advantage of trading using opposite National Storm and Intergroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storm position performs unexpectedly, Intergroup 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 Intergroup will offset losses from the drop in Intergroup's long position.| National Storm vs. Interfor | National Storm vs. Western Forest Products | National Storm vs. Stella Jones | National Storm vs. Simpson Manufacturing |
| Intergroup vs. Huazhu Group | Intergroup vs. Atour Lifestyle Holdings | Intergroup vs. LuxUrban Hotels | Intergroup vs. InterContinental Hotels 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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