Correlation Between Investor and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Investor and Intermediate Capital 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 Investor and Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Intermediate Capital Group, you can compare the effects of market volatilities on Investor and Intermediate Capital 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 Investor with a short position of Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Intermediate Capital.
Diversification Opportunities for Investor and Intermediate Capital
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investor and Intermediate is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Investor 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 Investor AB ser are associated (or correlated) with Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Investor i.e., Investor and Intermediate Capital go up and down completely randomly.
Pair Corralation between Investor and Intermediate Capital
Assuming the 90 days horizon Investor is expected to generate 1.84 times less return on investment than Intermediate Capital. But when comparing it to its historical volatility, Investor AB ser is 1.63 times less risky than Intermediate Capital. It trades about 0.08 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,913 in Intermediate Capital Group on October 8, 2024 and sell it today you would earn a total of 801.00 from holding Intermediate Capital Group or generate 41.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 63.7% |
Values | Daily Returns |
Investor AB ser vs. Intermediate Capital Group
Performance |
Timeline |
Investor AB ser |
Intermediate Capital |
Investor and Intermediate Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investor and Intermediate Capital
The main advantage of trading using opposite Investor and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.Investor vs. Guggenheim Strategic Opportunities | Investor vs. Pimco Dynamic Income | Investor vs. Rivernorth Opportunities | Investor vs. Cornerstone Strategic Value |
Intermediate Capital vs. Carlyle Secured Lending | Intermediate Capital vs. Sixth Street Specialty | Intermediate Capital vs. Hercules Capital | Intermediate Capital vs. BlackRock TCP Capital |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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