Correlation Between Vow ASA and International Consolidated

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

By analyzing existing cross correlation between Vow ASA and International Consolidated Airlines, you can compare the effects of market volatilities on Vow ASA and International Consolidated 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 Vow ASA with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and International Consolidated.

Diversification Opportunities for Vow ASA and International Consolidated

-0.69

Correlation Coefficient

Vow ASA  International Consolidated

Excellent diversification

The 3 months correlation between Vow and International is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Vow ASA 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 Vow ASA are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Vow ASA i.e., Vow ASA and International Consolidated go up and down completely randomly.

Pair Corralation between Vow ASA and International Consolidated

Assuming the 90 days horizon Vow ASA is expected to under-perform the International Consolidated. In addition to that, Vow ASA is 5.2 times more volatile than International Consolidated Airlines. It trades about -0.13 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.3 per unit of volatility. If you would invest  469.00  in International Consolidated Airlines on August 31, 2024 and sell it today you would earn a total of  179.00  from holding International Consolidated Airlines or generate 38.17% return on investment over 90 days.

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

Vow ASA  vs.  International Consolidated Air

Vow ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vow ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

International Consolidated

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, International Consolidated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vow ASA and International Consolidated

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

The idea behind Vow ASA and International Consolidated Airlines 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.