Correlation Between C I and INTERNATIONAL ENERGY

Can any of the company-specific risk be diversified away by investing in both C I and INTERNATIONAL ENERGY 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 C I and INTERNATIONAL ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C I LEASING and INTERNATIONAL ENERGY INSURANCE, you can compare the effects of market volatilities on C I and INTERNATIONAL ENERGY 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 C I with a short position of INTERNATIONAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of C I and INTERNATIONAL ENERGY.

Diversification Opportunities for C I and INTERNATIONAL ENERGY

0.23

Correlation Coefficient

C I  INTERNATIONAL ENERGY

Modest diversification

The 3 months correlation between CILEASING and INTERNATIONAL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding C I LEASING and INTERNATIONAL ENERGY INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL ENERGY and C I 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 C I LEASING are associated (or correlated) with INTERNATIONAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL ENERGY has no effect on the direction of C I i.e., C I and INTERNATIONAL ENERGY go up and down completely randomly.

Pair Corralation between C I and INTERNATIONAL ENERGY

Assuming the 90 days trading horizon C I LEASING is expected to generate 0.94 times more return on investment than INTERNATIONAL ENERGY. However, C I LEASING is 1.07 times less risky than INTERNATIONAL ENERGY. It trades about 0.11 of its potential returns per unit of risk. INTERNATIONAL ENERGY INSURANCE is currently generating about 0.09 per unit of risk. If you would invest  371.00  in C I LEASING on October 9, 2024 and sell it today you would earn a total of  94.00  from holding C I LEASING or generate 25.34% return on investment over 90 days.

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

C I LEASING  vs.  INTERNATIONAL ENERGY INSURANCE

C I LEASING

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, C I demonstrated solid returns over the last few months and may actually be approaching a breakup point.

INTERNATIONAL ENERGY

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNATIONAL ENERGY INSURANCE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERNATIONAL ENERGY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C I and INTERNATIONAL ENERGY

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

The idea behind C I LEASING and INTERNATIONAL ENERGY INSURANCE 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.