Correlation Between Integral and Transurban

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

By analyzing existing cross correlation between Integral Ad Science and Transurban Group, you can compare the effects of market volatilities on Integral and Transurban 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 Integral with a short position of Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Transurban.

Diversification Opportunities for Integral and Transurban

0.17

Correlation Coefficient

Integral  Transurban

Average diversification

The 3 months correlation between Integral and Transurban is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Integral 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 Integral Ad Science are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Integral i.e., Integral and Transurban go up and down completely randomly.

Pair Corralation between Integral and Transurban

Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the Transurban. But the stock apears to be less risky and, when comparing its historical volatility, Integral Ad Science is 1.79 times less risky than Transurban. The stock trades about -0.07 of its potential returns per unit of risk. The Transurban Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  860.00  in Transurban Group on October 20, 2024 and sell it today you would lose (35.00) from holding Transurban Group or give up 4.07% of portfolio value over 90 days.

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

Integral Ad Science  vs.  Transurban Group

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Transurban Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transurban is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Integral and Transurban

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

The idea behind Integral Ad Science and Transurban Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.