Correlation Between Ithaca Energy and Pets At

Can any of the company-specific risk be diversified away by investing in both Ithaca Energy and Pets At 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 Ithaca Energy and Pets At into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ithaca Energy PLC and Pets at Home, you can compare the effects of market volatilities on Ithaca Energy and Pets At 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 Ithaca Energy with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ithaca Energy and Pets At.

Diversification Opportunities for Ithaca Energy and Pets At

-0.02

Correlation Coefficient

Ithaca Energy  Pets At

Good diversification

The 3 months correlation between Ithaca and Pets is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ithaca Energy PLC and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and Ithaca Energy 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 Ithaca Energy PLC are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Ithaca Energy i.e., Ithaca Energy and Pets At go up and down completely randomly.

Pair Corralation between Ithaca Energy and Pets At

Assuming the 90 days trading horizon Ithaca Energy PLC is expected to generate 1.19 times more return on investment than Pets At. However, Ithaca Energy is 1.19 times more volatile than Pets at Home. It trades about 0.23 of its potential returns per unit of risk. Pets at Home is currently generating about 0.03 per unit of risk. If you would invest  10,420  in Ithaca Energy PLC on December 1, 2024 and sell it today you would earn a total of  3,880  from holding Ithaca Energy PLC or generate 37.24% return on investment over 90 days.

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

Ithaca Energy PLC  vs.  Pets at Home

Ithaca Energy PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ithaca Energy PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ithaca Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pets at Home

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pets At is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ithaca Energy and Pets At

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

The idea behind Ithaca Energy PLC and Pets at Home 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.