Correlation Between Information Services and 2028 Investment

Can any of the company-specific risk be diversified away by investing in both Information Services and 2028 Investment 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 Information Services and 2028 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Information Services and 2028 Investment Grade, you can compare the effects of market volatilities on Information Services and 2028 Investment 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 Information Services with a short position of 2028 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and 2028 Investment.

Diversification Opportunities for Information Services and 2028 Investment

0.25

Correlation Coefficient

Information Services  2028 Investment

Modest diversification

The 3 months correlation between Information and 2028 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and 2028 Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2028 Investment Grade and Information Services 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 Information Services are associated (or correlated) with 2028 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2028 Investment Grade has no effect on the direction of Information Services i.e., Information Services and 2028 Investment go up and down completely randomly.

Pair Corralation between Information Services and 2028 Investment

Assuming the 90 days trading horizon Information Services is expected to under-perform the 2028 Investment. But the stock apears to be less risky and, when comparing its historical volatility, Information Services is 4.41 times less risky than 2028 Investment. The stock trades about -0.08 of its potential returns per unit of risk. The 2028 Investment Grade is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,031  in 2028 Investment Grade on October 6, 2024 and sell it today you would lose (25.00) from holding 2028 Investment Grade or give up 2.42% of portfolio value over 90 days.

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

Information Services  vs.  2028 Investment Grade

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

2028 Investment Grade

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 2028 Investment Grade are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, 2028 Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Information Services and 2028 Investment

The main advantage of trading using opposite Information Services and 2028 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services position performs unexpectedly, 2028 Investment 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 2028 Investment will offset losses from the drop in 2028 Investment's long position.

The idea behind Information Services and 2028 Investment Grade 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.