Correlation Between Young Cos and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Young Cos 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 Young Cos and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and International Consolidated Airlines, you can compare the effects of market volatilities on Young Cos 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 Young Cos with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and International Consolidated.
Diversification Opportunities for Young Cos and International Consolidated
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Young and International is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Young Cos 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 Young Cos Brewery 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 Young Cos i.e., Young Cos and International Consolidated go up and down completely randomly.
Pair Corralation between Young Cos and International Consolidated
Assuming the 90 days trading horizon Young Cos is expected to generate 3.84 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Young Cos Brewery is 1.33 times less risky than International Consolidated. It trades about 0.13 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 21,530 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 3,760 from holding International Consolidated Airlines or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. International Consolidated Air
Performance |
| Timeline |
| Young Cos Brewery |
| International Consolidated |
Young Cos and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and International Consolidated
The main advantage of trading using opposite Young Cos and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos 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.| Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co | Young Cos vs. Toyota Motor Corp | Young Cos vs. Hon Hai Precision |
| International Consolidated vs. Ross Stores | International Consolidated vs. X FAB Silicon Foundries | International Consolidated vs. Celebrus Technologies plc | International Consolidated vs. Playtech Plc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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