Correlation Between International Consolidated and ADYEN NV

Can any of the company-specific risk be diversified away by investing in both International Consolidated and ADYEN NV 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 ADYEN NV 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 ADYEN NV UNSPADR001, you can compare the effects of market volatilities on International Consolidated and ADYEN NV 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 ADYEN NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and ADYEN NV.

Diversification Opportunities for International Consolidated and ADYEN NV

0.44

Correlation Coefficient

International Consolidated  ADYEN NV

Very weak diversification

The 3 months correlation between International and ADYEN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and ADYEN NV UNSPADR001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADYEN NV UNSPADR001 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 ADYEN NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADYEN NV UNSPADR001 has no effect on the direction of International Consolidated i.e., International Consolidated and ADYEN NV go up and down completely randomly.

Pair Corralation between International Consolidated and ADYEN NV

Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.66 times more return on investment than ADYEN NV. However, International Consolidated Airlines is 1.52 times less risky than ADYEN NV. It trades about 0.38 of its potential returns per unit of risk. ADYEN NV UNSPADR001 is currently generating about 0.05 per unit of risk. If you would invest  230.00  in International Consolidated Airlines on October 5, 2024 and sell it today you would earn a total of  131.00  from holding International Consolidated Airlines or generate 56.96% 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.  ADYEN NV UNSPADR001

International Consolidated

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days International Consolidated Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

ADYEN NV UNSPADR001

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days ADYEN NV UNSPADR001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, ADYEN NV may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with International Consolidated and ADYEN NV

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

The idea behind International Consolidated Airlines and ADYEN NV UNSPADR001 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.