Correlation Between Young Cos and Ithaca Energy
Can any of the company-specific risk be diversified away by investing in both Young Cos and Ithaca Energy 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 Ithaca Energy 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 Ithaca Energy PLC, you can compare the effects of market volatilities on Young Cos and Ithaca Energy 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 Ithaca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and Ithaca Energy.
Diversification Opportunities for Young Cos and Ithaca Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Young and Ithaca is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and Ithaca Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ithaca Energy PLC 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 Ithaca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ithaca Energy PLC has no effect on the direction of Young Cos i.e., Young Cos and Ithaca Energy go up and down completely randomly.
Pair Corralation between Young Cos and Ithaca Energy
Assuming the 90 days trading horizon Young Cos is expected to generate 2.24 times less return on investment than Ithaca Energy. But when comparing it to its historical volatility, Young Cos Brewery is 4.24 times less risky than Ithaca Energy. It trades about 0.16 of its potential returns per unit of risk. Ithaca Energy PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,820 in Ithaca Energy PLC on September 3, 2024 and sell it today you would earn a total of 580.00 from holding Ithaca Energy PLC or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. Ithaca Energy PLC
Performance |
| Timeline |
| Young Cos Brewery |
| Ithaca Energy PLC |
Young Cos and Ithaca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and Ithaca Energy
The main advantage of trading using opposite Young Cos and Ithaca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, Ithaca Energy 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 Ithaca Energy will offset losses from the drop in Ithaca Energy's long position.| Young Cos vs. Odyssean Investment Trust | Young Cos vs. Host Hotels Resorts | Young Cos vs. United Utilities Group | Young Cos vs. Herald Investment Trust |
| Ithaca Energy vs. Bisichi Mining PLC | Ithaca Energy vs. Monster Beverage Corp | Ithaca Energy vs. Young Cos Brewery | Ithaca Energy vs. Cornish Metals |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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