Correlation Between Spirent Communications and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Intermediate Capital 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 Spirent Communications and Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Intermediate Capital Group, you can compare the effects of market volatilities on Spirent Communications and Intermediate Capital 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 Spirent Communications with a short position of Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Intermediate Capital.
Diversification Opportunities for Spirent Communications and Intermediate Capital
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Intermediate is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Spirent Communications i.e., Spirent Communications and Intermediate Capital go up and down completely randomly.
Pair Corralation between Spirent Communications and Intermediate Capital
Assuming the 90 days trading horizon Spirent Communications plc is expected to under-perform the Intermediate Capital. In addition to that, Spirent Communications is 1.87 times more volatile than Intermediate Capital Group. It trades about -0.01 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.07 per unit of volatility. If you would invest 112,264 in Intermediate Capital Group on August 25, 2024 and sell it today you would earn a total of 97,136 from holding Intermediate Capital Group or generate 86.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Intermediate Capital Group
Performance |
| Timeline |
| Spirent Communications |
| Intermediate Capital |
Spirent Communications and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Intermediate Capital
The main advantage of trading using opposite Spirent Communications and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals Holdings |
| Intermediate Capital vs. Catalyst Media Group | Intermediate Capital vs. Oncimmune Holdings plc | Intermediate Capital vs. Invesco Health Care | Intermediate Capital vs. Coor Service Management |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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