Correlation Between Piper Sandler and Interactive Brokers

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

By analyzing existing cross correlation between Piper Sandler Companies and Interactive Brokers Group, you can compare the effects of market volatilities on Piper Sandler and Interactive Brokers 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 Piper Sandler with a short position of Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piper Sandler and Interactive Brokers.

Diversification Opportunities for Piper Sandler and Interactive Brokers

0.68

Correlation Coefficient

Piper Sandler  Interactive Brokers

Poor diversification

The 3 months correlation between Piper and Interactive is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Piper Sandler Companies and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers and Piper Sandler 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 Piper Sandler Companies are associated (or correlated) with Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Piper Sandler i.e., Piper Sandler and Interactive Brokers go up and down completely randomly.

Pair Corralation between Piper Sandler and Interactive Brokers

Given the investment horizon of 90 days Piper Sandler Companies is expected to under-perform the Interactive Brokers. But the stock apears to be less risky and, when comparing its historical volatility, Piper Sandler Companies is 1.63 times less risky than Interactive Brokers. The stock trades about -0.13 of its potential returns per unit of risk. The Interactive Brokers Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  17,873  in Interactive Brokers Group on December 30, 2024 and sell it today you would lose (1,401) from holding Interactive Brokers Group or give up 7.84% of portfolio value over 90 days.

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

Piper Sandler Companies  vs.  Interactive Brokers Group

Piper Sandler Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piper Sandler Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Interactive Brokers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interactive Brokers Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Interactive Brokers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Piper Sandler and Interactive Brokers

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

The idea behind Piper Sandler Companies and Interactive Brokers 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.