Correlation Between Plains All and Ionet

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

By analyzing existing cross correlation between Plains All American and ionet, you can compare the effects of market volatilities on Plains All and Ionet 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 Plains All with a short position of Ionet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains All and Ionet.

Diversification Opportunities for Plains All and Ionet

-0.6

Correlation Coefficient

Plains All  Ionet

Excellent diversification

The 3 months correlation between Plains and Ionet is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Plains All American and ionet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ionet and Plains All 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 Plains All American are associated (or correlated) with Ionet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ionet has no effect on the direction of Plains All i.e., Plains All and Ionet go up and down completely randomly.

Pair Corralation between Plains All and Ionet

Considering the 90-day investment horizon Plains All American is expected to generate 0.22 times more return on investment than Ionet. However, Plains All American is 4.6 times less risky than Ionet. It trades about 0.2 of its potential returns per unit of risk. ionet is currently generating about -0.2 per unit of risk. If you would invest  1,652  in Plains All American on December 28, 2024 and sell it today you would earn a total of  357.00  from holding Plains All American or generate 21.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Plains All American  vs.  ionet

Plains All American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plains All American are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Plains All sustained solid returns over the last few months and may actually be approaching a breakup point.

ionet

Risk-Adjusted Performance

Very Weak

Over the last 90 days ionet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for ionet shareholders.

Pair Trading with Plains All and Ionet

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

The idea behind Plains All American and ionet 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.