Correlation Between International Consolidated and OneSavings Bank

Can any of the company-specific risk be diversified away by investing in both International Consolidated and OneSavings Bank 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 International Consolidated and OneSavings Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Consolidated Airlines and OneSavings Bank PLC, you can compare the effects of market volatilities on International Consolidated and OneSavings Bank 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 International Consolidated with a short position of OneSavings Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and OneSavings Bank.

Diversification Opportunities for International Consolidated and OneSavings Bank

-0.15

Correlation Coefficient

International Consolidated  OneSavings Bank

Good diversification

The 3 months correlation between International and OneSavings is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and OneSavings Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSavings Bank PLC and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with OneSavings Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSavings Bank PLC has no effect on the direction of International Consolidated i.e., International Consolidated and OneSavings Bank go up and down completely randomly.

Pair Corralation between International Consolidated and OneSavings Bank

Assuming the 90 days trading horizon International Consolidated Airlines is expected to under-perform the OneSavings Bank. In addition to that, International Consolidated is 1.11 times more volatile than OneSavings Bank PLC. It trades about -0.02 of its total potential returns per unit of risk. OneSavings Bank PLC is currently generating about 0.12 per unit of volatility. If you would invest  37,750  in OneSavings Bank PLC on December 28, 2024 and sell it today you would earn a total of  5,530  from holding OneSavings Bank PLC or generate 14.65% return on investment over 90 days.

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

International Consolidated Air  vs.  OneSavings Bank PLC

International Consolidated

Risk-Adjusted Performance

Very Weak

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

OneSavings Bank PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OneSavings Bank PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, OneSavings Bank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and OneSavings Bank

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

The idea behind International Consolidated Airlines and OneSavings Bank PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.