Correlation Between Automatic Bank and IBI Inv
Can any of the company-specific risk be diversified away by investing in both Automatic Bank and IBI Inv 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 Automatic Bank and IBI Inv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Bank Services and IBI Inv House, you can compare the effects of market volatilities on Automatic Bank and IBI Inv 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 Automatic Bank with a short position of IBI Inv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Bank and IBI Inv.
Diversification Opportunities for Automatic Bank and IBI Inv
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and IBI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and IBI Inv House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Inv House and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with IBI Inv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Inv House has no effect on the direction of Automatic Bank i.e., Automatic Bank and IBI Inv go up and down completely randomly.
Pair Corralation between Automatic Bank and IBI Inv
Assuming the 90 days trading horizon Automatic Bank is expected to generate 1.41 times less return on investment than IBI Inv. In addition to that, Automatic Bank is 1.08 times more volatile than IBI Inv House. It trades about 0.11 of its total potential returns per unit of risk. IBI Inv House is currently generating about 0.17 per unit of volatility. If you would invest 573,016 in IBI Inv House on December 5, 2024 and sell it today you would earn a total of 1,492,984 from holding IBI Inv House or generate 260.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Bank Services vs. IBI Inv House
Performance |
| Timeline |
| Automatic Bank Services |
| IBI Inv House |
Automatic Bank and IBI Inv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Bank and IBI Inv
The main advantage of trading using opposite Automatic Bank and IBI Inv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Bank position performs unexpectedly, IBI Inv 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 IBI Inv will offset losses from the drop in IBI Inv's long position.The idea behind Automatic Bank Services and IBI Inv House pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IBI Inv vs. Blender Financial Technologies | ||
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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