Correlation Between Avonmore Capital and Industrial Investment

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

By analyzing existing cross correlation between Avonmore Capital Management and Industrial Investment Trust, you can compare the effects of market volatilities on Avonmore Capital and Industrial Investment 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 Avonmore Capital with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avonmore Capital and Industrial Investment.

Diversification Opportunities for Avonmore Capital and Industrial Investment

-0.42

Correlation Coefficient

Avonmore Capital  Industrial Investment

Very good diversification

The 3 months correlation between Avonmore and Industrial is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Avonmore Capital Management and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Avonmore Capital 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 Avonmore Capital Management are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Avonmore Capital i.e., Avonmore Capital and Industrial Investment go up and down completely randomly.

Pair Corralation between Avonmore Capital and Industrial Investment

Assuming the 90 days trading horizon Avonmore Capital Management is expected to generate 2.06 times more return on investment than Industrial Investment. However, Avonmore Capital is 2.06 times more volatile than Industrial Investment Trust. It trades about 0.05 of its potential returns per unit of risk. Industrial Investment Trust is currently generating about -0.16 per unit of risk. If you would invest  1,765  in Avonmore Capital Management on November 29, 2024 and sell it today you would earn a total of  143.00  from holding Avonmore Capital Management or generate 8.1% return on investment over 90 days.

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

Avonmore Capital Management  vs.  Industrial Investment Trust

Avonmore Capital Man

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avonmore Capital Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Avonmore Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Industrial Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrial Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Avonmore Capital and Industrial Investment

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

The idea behind Avonmore Capital Management and Industrial Investment Trust 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.