Correlation Between Interactive Brokers and Bayside Corp

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

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

Diversification Opportunities for Interactive Brokers and Bayside Corp

-0.63

Correlation Coefficient

Interactive Brokers  Bayside Corp

Excellent diversification

The 3 months correlation between Interactive and Bayside is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Bayside Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayside Corp and Interactive Brokers 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 Interactive Brokers Group are associated (or correlated) with Bayside Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayside Corp has no effect on the direction of Interactive Brokers i.e., Interactive Brokers and Bayside Corp go up and down completely randomly.

Pair Corralation between Interactive Brokers and Bayside Corp

Given the investment horizon of 90 days Interactive Brokers is expected to generate 2.43 times less return on investment than Bayside Corp. But when comparing it to its historical volatility, Interactive Brokers Group is 8.53 times less risky than Bayside Corp. It trades about 0.2 of its potential returns per unit of risk. Bayside Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Bayside Corp on October 24, 2024 and sell it today you would lose (2.00) from holding Bayside Corp or give up 2.47% of portfolio value over 90 days.

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

Interactive Brokers Group  vs.  Bayside Corp

Interactive Brokers

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

Bayside Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayside Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Interactive Brokers and Bayside Corp

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

The idea behind Interactive Brokers Group and Bayside Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.