Correlation Between Iridium Communications and Comstock Holding

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

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

Diversification Opportunities for Iridium Communications and Comstock Holding

0.18

Correlation Coefficient

Iridium Communications  Comstock Holding

Average diversification

The 3 months correlation between Iridium and Comstock is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com and Iridium Communications 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 Iridium Communications are associated (or correlated) with Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of Iridium Communications i.e., Iridium Communications and Comstock Holding go up and down completely randomly.

Pair Corralation between Iridium Communications and Comstock Holding

Given the investment horizon of 90 days Iridium Communications is expected to generate 0.48 times more return on investment than Comstock Holding. However, Iridium Communications is 2.07 times less risky than Comstock Holding. It trades about -0.18 of its potential returns per unit of risk. Comstock Holding Companies is currently generating about -0.1 per unit of risk. If you would invest  3,140  in Iridium Communications on October 8, 2024 and sell it today you would lose (131.00) from holding Iridium Communications or give up 4.17% of portfolio value over 90 days.

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

Iridium Communications  vs.  Comstock Holding Companies

Iridium Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Iridium Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Comstock Holding Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comstock Holding Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Iridium Communications and Comstock Holding

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

The idea behind Iridium Communications and Comstock Holding Companies 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .