Correlation Between All American and Intouch Insight

Can any of the company-specific risk be diversified away by investing in both All American and Intouch Insight 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 All American and Intouch Insight into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between All American Gld and Intouch Insight, you can compare the effects of market volatilities on All American and Intouch Insight 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 All American with a short position of Intouch Insight. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and Intouch Insight.

Diversification Opportunities for All American and Intouch Insight

0.53

Correlation Coefficient

All American  Intouch Insight

Very weak diversification

The 3 months correlation between All and Intouch is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding All American Gld and Intouch Insight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Insight and All American 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 All American Gld are associated (or correlated) with Intouch Insight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Insight has no effect on the direction of All American i.e., All American and Intouch Insight go up and down completely randomly.

Pair Corralation between All American and Intouch Insight

Given the investment horizon of 90 days All American Gld is expected to generate 3.05 times more return on investment than Intouch Insight. However, All American is 3.05 times more volatile than Intouch Insight. It trades about -0.01 of its potential returns per unit of risk. Intouch Insight is currently generating about -0.05 per unit of risk. If you would invest  0.13  in All American Gld on December 28, 2024 and sell it today you would lose (0.04) from holding All American Gld or give up 30.77% of portfolio value over 90 days.

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

All American Gld  vs.  Intouch Insight

All American Gld

Risk-Adjusted Performance

Very Weak

Over the last 90 days All American Gld has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, All American is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Intouch Insight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intouch Insight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with All American and Intouch Insight

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

The idea behind All American Gld and Intouch Insight 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.