Correlation Between Intuit and CommScope Holding

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

By analyzing existing cross correlation between Intuit Inc and CommScope Holding Co, you can compare the effects of market volatilities on Intuit and CommScope Holding 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 Intuit with a short position of CommScope Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and CommScope Holding.

Diversification Opportunities for Intuit and CommScope Holding

0.52

Correlation Coefficient

Intuit  CommScope Holding

Very weak diversification

The 3 months correlation between Intuit and CommScope is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and CommScope Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CommScope Holding and Intuit 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 Intuit Inc are associated (or correlated) with CommScope Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CommScope Holding has no effect on the direction of Intuit i.e., Intuit and CommScope Holding go up and down completely randomly.

Pair Corralation between Intuit and CommScope Holding

Given the investment horizon of 90 days Intuit Inc is expected to under-perform the CommScope Holding. But the stock apears to be less risky and, when comparing its historical volatility, Intuit Inc is 2.32 times less risky than CommScope Holding. The stock trades about -0.01 of its potential returns per unit of risk. The CommScope Holding Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  486.00  in CommScope Holding Co on December 1, 2024 and sell it today you would earn a total of  149.00  from holding CommScope Holding Co or generate 30.66% return on investment over 90 days.

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

Intuit Inc  vs.  CommScope Holding Co

Intuit Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuit Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intuit is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CommScope Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CommScope Holding Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, CommScope Holding displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuit and CommScope Holding

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

The idea behind Intuit Inc and CommScope Holding Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.