Correlation Between SLR Investment and International Consolidated
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and International Consolidated Airlines, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and International Consolidated.
Diversification Opportunities for SLR Investment and International Consolidated
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SLR and International is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and International Consolidated go up and down completely randomly.
Pair Corralation between SLR Investment and International Consolidated
Assuming the 90 days horizon SLR Investment is expected to generate 1.95 times less return on investment than International Consolidated. But when comparing it to its historical volatility, SLR Investment Corp is 1.81 times less risky than International Consolidated. It trades about 0.08 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 181.00 in International Consolidated Airlines on August 31, 2024 and sell it today you would earn a total of 130.00 from holding International Consolidated Airlines or generate 71.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
SLR Investment Corp vs. International Consolidated Air
Performance |
| Timeline |
| SLR Investment Corp |
| International Consolidated |
SLR Investment and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and International Consolidated
The main advantage of trading using opposite SLR Investment and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. Astral Foods Limited | SLR Investment vs. Collins Foods Limited | SLR Investment vs. United Natural Foods | SLR Investment vs. GRIFFIN MINING LTD |
| International Consolidated vs. Southwest Airlines Co | International Consolidated vs. Superior Plus Corp | International Consolidated vs. NMI Holdings | International Consolidated vs. Origin Agritech |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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