Correlation Between Indra Sistemas and CLARIVATE PLC

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

By analyzing existing cross correlation between Indra Sistemas SA and CLARIVATE PLC, you can compare the effects of market volatilities on Indra Sistemas and CLARIVATE PLC 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 Indra Sistemas with a short position of CLARIVATE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indra Sistemas and CLARIVATE PLC.

Diversification Opportunities for Indra Sistemas and CLARIVATE PLC

0.63

Correlation Coefficient

Indra Sistemas  CLARIVATE PLC

Poor diversification

The 3 months correlation between Indra and CLARIVATE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Indra Sistemas SA and CLARIVATE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLARIVATE PLC and Indra Sistemas 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 Indra Sistemas SA are associated (or correlated) with CLARIVATE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLARIVATE PLC has no effect on the direction of Indra Sistemas i.e., Indra Sistemas and CLARIVATE PLC go up and down completely randomly.

Pair Corralation between Indra Sistemas and CLARIVATE PLC

Assuming the 90 days horizon Indra Sistemas SA is expected to generate 0.78 times more return on investment than CLARIVATE PLC. However, Indra Sistemas SA is 1.29 times less risky than CLARIVATE PLC. It trades about 0.03 of its potential returns per unit of risk. CLARIVATE PLC is currently generating about -0.01 per unit of risk. If you would invest  716.00  in Indra Sistemas SA on September 26, 2024 and sell it today you would earn a total of  137.00  from holding Indra Sistemas SA or generate 19.13% return on investment over 90 days.

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

Indra Sistemas SA  vs.  CLARIVATE PLC

Indra Sistemas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indra Sistemas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CLARIVATE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Indra Sistemas and CLARIVATE PLC

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

The idea behind Indra Sistemas SA and CLARIVATE PLC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.