Correlation Between Morgan Advanced and Intermediate Capital

Can any of the company-specific risk be diversified away by investing in both Morgan Advanced 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 Morgan Advanced and Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Advanced Materials and Intermediate Capital Group, you can compare the effects of market volatilities on Morgan Advanced 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 Morgan Advanced with a short position of Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Intermediate Capital.

Diversification Opportunities for Morgan Advanced and Intermediate Capital

0.4

Correlation Coefficient

Morgan Advanced  Intermediate Capital

Very weak diversification

The 3 months correlation between Morgan and Intermediate is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Morgan Advanced 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 Morgan Advanced Materials 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 Morgan Advanced i.e., Morgan Advanced and Intermediate Capital go up and down completely randomly.

Pair Corralation between Morgan Advanced and Intermediate Capital

Assuming the 90 days trading horizon Morgan Advanced Materials is expected to under-perform the Intermediate Capital. In addition to that, Morgan Advanced is 1.25 times more volatile than Intermediate Capital Group. It trades about -0.16 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.01 per unit of volatility. If you would invest  206,400  in Intermediate Capital Group on December 26, 2024 and sell it today you would earn a total of  200.00  from holding Intermediate Capital Group or generate 0.1% return on investment over 90 days.

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

Morgan Advanced Materials  vs.  Intermediate Capital Group

Morgan Advanced Materials

Risk-Adjusted Performance

Very Weak

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

Intermediate Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Advanced and Intermediate Capital

The main advantage of trading using opposite Morgan Advanced and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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.

The idea behind Morgan Advanced Materials and Intermediate Capital Group 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 Stocks Directory module to find actively traded stocks across global markets.