Correlation Between Silver Castle and IBI Inv

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

By analyzing existing cross correlation between Silver Castle Holdings and IBI Inv House, you can compare the effects of market volatilities on Silver Castle and IBI Inv 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 Silver Castle with a short position of IBI Inv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Castle and IBI Inv.

Diversification Opportunities for Silver Castle and IBI Inv

-0.47

Correlation Coefficient

Silver Castle  IBI Inv

Very good diversification

The 3 months correlation between Silver and IBI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Silver Castle Holdings and IBI Inv House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Inv House and Silver Castle 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 Silver Castle Holdings are associated (or correlated) with IBI Inv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Inv House has no effect on the direction of Silver Castle i.e., Silver Castle and IBI Inv go up and down completely randomly.

Pair Corralation between Silver Castle and IBI Inv

Assuming the 90 days trading horizon Silver Castle Holdings is expected to under-perform the IBI Inv. In addition to that, Silver Castle is 2.62 times more volatile than IBI Inv House. It trades about -0.01 of its total potential returns per unit of risk. IBI Inv House is currently generating about 0.32 per unit of volatility. If you would invest  1,575,659  in IBI Inv House on November 28, 2024 and sell it today you would earn a total of  605,341  from holding IBI Inv House or generate 38.42% return on investment over 90 days.

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

Silver Castle Holdings  vs.  IBI Inv House

Silver Castle Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Castle Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Silver Castle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IBI Inv House

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Inv House are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, IBI Inv sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Castle and IBI Inv

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

The idea behind Silver Castle Holdings and IBI Inv House 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.