Correlation Between Capital Futures and IBF Financial

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

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

Diversification Opportunities for Capital Futures and IBF Financial

-0.47

Correlation Coefficient

Capital Futures  IBF Financial

Very good diversification

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

Pair Corralation between Capital Futures and IBF Financial

Assuming the 90 days trading horizon Capital Futures is expected to generate 1.47 times less return on investment than IBF Financial. But when comparing it to its historical volatility, Capital Futures Corp is 1.05 times less risky than IBF Financial. It trades about 0.03 of its potential returns per unit of risk. IBF Financial Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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

Capital Futures Corp  vs.  IBF Financial Holdings

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.

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.

Pair Trading with Capital Futures and IBF Financial

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

The idea behind Capital Futures Corp and IBF Financial Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.