Correlation Between Intrepid Potash and E I

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

By analyzing existing cross correlation between Intrepid Potash and E I du, you can compare the effects of market volatilities on Intrepid Potash and E I 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 Intrepid Potash with a short position of E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intrepid Potash and E I.

Diversification Opportunities for Intrepid Potash and E I

-0.56

Correlation Coefficient

Intrepid Potash  E I

Excellent diversification

The 3 months correlation between Intrepid and CTA-PB is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Potash and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du and Intrepid Potash 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 Intrepid Potash are associated (or correlated) with E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of Intrepid Potash i.e., Intrepid Potash and E I go up and down completely randomly.

Pair Corralation between Intrepid Potash and E I

Considering the 90-day investment horizon Intrepid Potash is expected to generate 1.88 times more return on investment than E I. However, Intrepid Potash is 1.88 times more volatile than E I du. It trades about 0.11 of its potential returns per unit of risk. E I du is currently generating about -0.02 per unit of risk. If you would invest  2,355  in Intrepid Potash on September 3, 2024 and sell it today you would earn a total of  384.00  from holding Intrepid Potash or generate 16.31% return on investment over 90 days.

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

Intrepid Potash  vs.  E I du

Intrepid Potash

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Potash are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Intrepid Potash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

E I du

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E I du has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, E I is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intrepid Potash and E I

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

The idea behind Intrepid Potash and E I du 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.