Correlation Between Inflection Point and Iridium Communications

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

By analyzing existing cross correlation between Inflection Point Acquisition and Iridium Communications, you can compare the effects of market volatilities on Inflection Point and Iridium Communications 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 Inflection Point with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and Iridium Communications.

Diversification Opportunities for Inflection Point and Iridium Communications

0.34

Correlation Coefficient

Inflection Point  Iridium Communications

Weak diversification

The 3 months correlation between Inflection and Iridium is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Inflection Point i.e., Inflection Point and Iridium Communications go up and down completely randomly.

Pair Corralation between Inflection Point and Iridium Communications

Assuming the 90 days horizon Inflection Point Acquisition is expected to under-perform the Iridium Communications. In addition to that, Inflection Point is 1.54 times more volatile than Iridium Communications. It trades about -0.05 of its total potential returns per unit of risk. Iridium Communications is currently generating about -0.01 per unit of volatility. If you would invest  2,882  in Iridium Communications on December 30, 2024 and sell it today you would lose (128.00) from holding Iridium Communications or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	82.26%
Values	Daily Returns

Inflection Point Acquisition  vs.  Iridium Communications

Inflection Point Acq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inflection Point Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Iridium Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Inflection Point and Iridium Communications

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

The idea behind Inflection Point Acquisition and Iridium Communications 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.