Correlation Between International Consolidated and TOMI Environmental

Can any of the company-specific risk be diversified away by investing in both International Consolidated and TOMI Environmental 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 TOMI Environmental 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 TOMI Environmental Solutions, you can compare the effects of market volatilities on International Consolidated and TOMI Environmental 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 TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and TOMI Environmental.

Diversification Opportunities for International Consolidated and TOMI Environmental

0.56

Correlation Coefficient

International Consolidated  TOMI Environmental

Very weak diversification

The 3 months correlation between International and TOMI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental 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 TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of International Consolidated i.e., International Consolidated and TOMI Environmental go up and down completely randomly.

Pair Corralation between International Consolidated and TOMI Environmental

Assuming the 90 days horizon International Consolidated is expected to generate 1.04 times less return on investment than TOMI Environmental. But when comparing it to its historical volatility, International Consolidated Airlines is 2.82 times less risky than TOMI Environmental. It trades about 0.25 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  72.00  in TOMI Environmental Solutions on December 2, 2024 and sell it today you would earn a total of  17.00  from holding TOMI Environmental Solutions or generate 23.61% return on investment over 90 days.

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

International Consolidated Air  vs.  TOMI Environmental Solutions

International Consolidated

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, International Consolidated showed solid returns over the last few months and may actually be approaching a breakup point.

TOMI Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOMI Environmental Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, TOMI Environmental showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and TOMI Environmental

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

The idea behind International Consolidated Airlines and TOMI Environmental Solutions 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.