Correlation Between International Consolidated and Brockhaus Capital

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

Diversification Opportunities for International Consolidated and Brockhaus Capital

-0.73

Correlation Coefficient

International Consolidated  Brockhaus Capital

Pay attention - limited upside

The 3 months correlation between International and Brockhaus is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of International Consolidated i.e., International Consolidated and Brockhaus Capital go up and down completely randomly.

Pair Corralation between International Consolidated and Brockhaus Capital

Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.87 times more return on investment than Brockhaus Capital. However, International Consolidated Airlines is 1.15 times less risky than Brockhaus Capital. It trades about 0.39 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.1 per unit of risk. If you would invest  227.00  in International Consolidated Airlines on October 8, 2024 and sell it today you would earn a total of  136.00  from holding International Consolidated Airlines or generate 59.91% return on investment over 90 days.

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

International Consolidated Air  vs.  Brockhaus Capital Management

International Consolidated

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with International Consolidated and Brockhaus Capital

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

The idea behind International Consolidated Airlines and Brockhaus Capital 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.