Correlation Between Fox Wizel and Ilex Medical

Can any of the company-specific risk be diversified away by investing in both Fox Wizel and Ilex Medical 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 Fox Wizel and Ilex Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fox Wizel and Ilex Medical, you can compare the effects of market volatilities on Fox Wizel and Ilex Medical 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 Fox Wizel with a short position of Ilex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Wizel and Ilex Medical.

Diversification Opportunities for Fox Wizel and Ilex Medical

-0.41

Correlation Coefficient

Fox Wizel  Ilex Medical

Very good diversification

The 3 months correlation between Fox and Ilex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fox Wizel and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical and Fox Wizel 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 Fox Wizel are associated (or correlated) with Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Fox Wizel i.e., Fox Wizel and Ilex Medical go up and down completely randomly.

Pair Corralation between Fox Wizel and Ilex Medical

Assuming the 90 days trading horizon Fox Wizel is expected to generate 0.95 times more return on investment than Ilex Medical. However, Fox Wizel is 1.06 times less risky than Ilex Medical. It trades about 0.12 of its potential returns per unit of risk. Ilex Medical is currently generating about -0.12 per unit of risk. If you would invest  2,896,000  in Fox Wizel on November 30, 2024 and sell it today you would earn a total of  369,000  from holding Fox Wizel or generate 12.74% return on investment over 90 days.

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

Fox Wizel  vs.  Ilex Medical

Fox Wizel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Wizel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fox Wizel sustained solid returns over the last few months and may actually be approaching a breakup point.

Ilex Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ilex Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fox Wizel and Ilex Medical

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

The idea behind Fox Wizel and Ilex Medical 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.