Correlation Between International Consolidated and Deluxe

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

Diversification Opportunities for International Consolidated and Deluxe

-0.6

Correlation Coefficient

International Consolidated  Deluxe

Excellent diversification

The 3 months correlation between International and Deluxe is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe 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 Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of International Consolidated i.e., International Consolidated and Deluxe go up and down completely randomly.

Pair Corralation between International Consolidated and Deluxe

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 54.34 times more return on investment than Deluxe. However, International Consolidated is 54.34 times more volatile than Deluxe. It trades about 0.23 of its potential returns per unit of risk. Deluxe is currently generating about -0.12 per unit of risk. If you would invest  2.00  in International Consolidated Companies on September 26, 2024 and sell it today you would earn a total of  0.43  from holding International Consolidated Companies or generate 21.5% return on investment over 90 days.

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

International Consolidated Com  vs.  Deluxe

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.

Deluxe

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and Deluxe

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

The idea behind International Consolidated Companies and Deluxe 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.