Correlation Between Intuit and Red Hat
Can any of the company-specific risk be diversified away by investing in both Intuit and Red Hat 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 Intuit and Red Hat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuit Inc and Red Hat, you can compare the effects of market volatilities on Intuit and Red Hat 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 Intuit with a short position of Red Hat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and Red Hat.
Diversification Opportunities for Intuit and Red Hat
Pay attention - limited upside
The 3 months correlation between Intuit and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and Red Hat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hat and Intuit 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 Intuit Inc are associated (or correlated) with Red Hat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hat has no effect on the direction of Intuit i.e., Intuit and Red Hat go up and down completely randomly.
Pair Corralation between Intuit and Red Hat
If you would invest 43,970 in Intuit Inc on January 25, 2024 and sell it today you would earn a total of 19,118 from holding Intuit Inc or generate 43.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Intuit Inc vs. Red Hat
Performance |
| Timeline |
| Intuit Inc |
| Red Hat |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Intuit and Red Hat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuit and Red Hat
The main advantage of trading using opposite Intuit and Red Hat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit position performs unexpectedly, Red Hat 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 Red Hat will offset losses from the drop in Red Hat's long position.The idea behind Intuit Inc and Red Hat 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.| Red Hat vs. Diageo PLC ADR | Red Hat vs. NorthWestern | Red Hat vs. Anheuser Busch Inbev | Red Hat vs. Atmos Energy |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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