Correlation Between Industrial Investment and Computer Age

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

By analyzing existing cross correlation between Industrial Investment Trust and Computer Age Management, you can compare the effects of market volatilities on Industrial Investment and Computer Age 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 Industrial Investment with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Computer Age.

Diversification Opportunities for Industrial Investment and Computer Age

0.66

Correlation Coefficient

Industrial Investment  Computer Age

Poor diversification

The 3 months correlation between Industrial and Computer is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of Industrial Investment i.e., Industrial Investment and Computer Age go up and down completely randomly.

Pair Corralation between Industrial Investment and Computer Age

Assuming the 90 days trading horizon Industrial Investment Trust is expected to under-perform the Computer Age. In addition to that, Industrial Investment is 1.43 times more volatile than Computer Age Management. It trades about -0.06 of its total potential returns per unit of risk. Computer Age Management is currently generating about 0.29 per unit of volatility. If you would invest  453,810  in Computer Age Management on September 21, 2024 and sell it today you would earn a total of  57,535  from holding Computer Age Management or generate 12.68% return on investment over 90 days.

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

Industrial Investment Trust  vs.  Computer Age Management

Industrial Investment

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Computer Age Management

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Computer Age may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Industrial Investment and Computer Age

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

The idea behind Industrial Investment Trust and Computer Age Management 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.