Correlation Between International Consolidated and CompX International

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

By analyzing existing cross correlation between International Consolidated Companies and CompX International, you can compare the effects of market volatilities on International Consolidated and CompX International 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 CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and CompX International.

Diversification Opportunities for International Consolidated and CompX International

0.19

Correlation Coefficient

International Consolidated  CompX International

Average diversification

The 3 months correlation between International and CompX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International 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 Companies are associated (or correlated) with CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of International Consolidated i.e., International Consolidated and CompX International go up and down completely randomly.

Pair Corralation between International Consolidated and CompX International

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 61.47 times more return on investment than CompX International. However, International Consolidated is 61.47 times more volatile than CompX International. It trades about 0.27 of its potential returns per unit of risk. CompX International is currently generating about 0.05 per unit of risk. If you would invest  20.00  in International Consolidated Companies on September 26, 2024 and sell it today you would lose (17.57) from holding International Consolidated Companies or give up 87.85% of portfolio value over 90 days.

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

International Consolidated Com  vs.  CompX International

International Consolidated

Risk-Adjusted Performance

19 of 100

Solid

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

CompX International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, CompX International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with International Consolidated and CompX International

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

The idea behind International Consolidated Companies and CompX International 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.