Correlation Between IBF Financial and Capital Futures

Can any of the company-specific risk be diversified away by investing in both IBF Financial and Capital Futures 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 IBF Financial and Capital Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IBF Financial Holdings and Capital Futures Corp, you can compare the effects of market volatilities on IBF Financial and Capital Futures 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 IBF Financial with a short position of Capital Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBF Financial and Capital Futures.

Diversification Opportunities for IBF Financial and Capital Futures

-0.47

Correlation Coefficient

IBF Financial  Capital Futures

Very good diversification

The 3 months correlation between IBF and Capital is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Capital Futures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Futures Corp and IBF Financial 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 IBF Financial Holdings are associated (or correlated) with Capital Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Futures Corp has no effect on the direction of IBF Financial i.e., IBF Financial and Capital Futures go up and down completely randomly.

Pair Corralation between IBF Financial and Capital Futures

Assuming the 90 days trading horizon IBF Financial Holdings is expected to generate 1.05 times more return on investment than Capital Futures. However, IBF Financial is 1.05 times more volatile than Capital Futures Corp. It trades about 0.04 of its potential returns per unit of risk. Capital Futures Corp is currently generating about 0.03 per unit of risk. If you would invest  1,390  in IBF Financial Holdings on September 18, 2024 and sell it today you would earn a total of  130.00  from holding IBF Financial Holdings or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

IBF Financial Holdings  vs.  Capital Futures Corp

IBF Financial Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IBF Financial Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IBF Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Capital Futures Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Futures Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Capital Futures is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IBF Financial and Capital Futures

The main advantage of trading using opposite IBF Financial and Capital Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBF Financial position performs unexpectedly, Capital Futures 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 Capital Futures will offset losses from the drop in Capital Futures' long position.

The idea behind IBF Financial Holdings and Capital Futures Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.