Correlation Between INFORMATION SVC and Big 5
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC and Big 5 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 INFORMATION SVC and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Big 5 Sporting, you can compare the effects of market volatilities on INFORMATION SVC and Big 5 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 INFORMATION SVC with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Big 5.
Diversification Opportunities for INFORMATION SVC and Big 5
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INFORMATION and Big is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and INFORMATION SVC 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 INFORMATION SVC GRP are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and Big 5 go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Big 5
Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 0.52 times more return on investment than Big 5. However, INFORMATION SVC GRP is 1.92 times less risky than Big 5. It trades about 0.09 of its potential returns per unit of risk. Big 5 Sporting is currently generating about 0.02 per unit of risk. If you would invest 307.00 in INFORMATION SVC GRP on September 3, 2024 and sell it today you would earn a total of 39.00 from holding INFORMATION SVC GRP or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFORMATION SVC GRP vs. Big 5 Sporting
Performance |
| Timeline |
| INFORMATION SVC GRP |
| Big 5 Sporting |
INFORMATION SVC and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and Big 5
The main advantage of trading using opposite INFORMATION SVC and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| INFORMATION SVC vs. TOTAL GABON | INFORMATION SVC vs. Walgreens Boots Alliance | INFORMATION SVC vs. Peak Resources Limited |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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