Correlation Between Interactive Brokers and Computershare

Can any of the company-specific risk be diversified away by investing in both Interactive Brokers and Computershare 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 Computershare 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 Computershare Ltd ADR, you can compare the effects of market volatilities on Interactive Brokers and Computershare 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 Computershare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Brokers and Computershare.

Diversification Opportunities for Interactive Brokers and Computershare

0.91

Correlation Coefficient

Interactive Brokers  Computershare

Almost no diversification

The 3 months correlation between Interactive and Computershare is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Computershare Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare ADR 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare ADR has no effect on the direction of Interactive Brokers i.e., Interactive Brokers and Computershare go up and down completely randomly.

Pair Corralation between Interactive Brokers and Computershare

Given the investment horizon of 90 days Interactive Brokers Group is expected to generate 1.02 times more return on investment than Computershare. However, Interactive Brokers is 1.02 times more volatile than Computershare Ltd ADR. It trades about 0.27 of its potential returns per unit of risk. Computershare Ltd ADR is currently generating about 0.04 per unit of risk. If you would invest  17,600  in Interactive Brokers Group on October 11, 2024 and sell it today you would earn a total of  1,489  from holding Interactive Brokers Group or generate 8.46% return on investment over 90 days.

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

Interactive Brokers Group  vs.  Computershare Ltd ADR

Interactive Brokers

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

Computershare ADR

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Ltd ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Computershare showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interactive Brokers and Computershare

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

The idea behind Interactive Brokers Group and Computershare Ltd ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.