Correlation Between Admiral Group and Interconnection Electric
Can any of the company-specific risk be diversified away by investing in both Admiral Group and Interconnection Electric 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 Admiral Group and Interconnection Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group PLC and Interconnection Electric SA, you can compare the effects of market volatilities on Admiral Group and Interconnection Electric 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 Admiral Group with a short position of Interconnection Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Interconnection Electric.
Diversification Opportunities for Admiral Group and Interconnection Electric
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Admiral and Interconnection is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group PLC and Interconnection Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interconnection Electric and Admiral Group 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 Admiral Group PLC are associated (or correlated) with Interconnection Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interconnection Electric has no effect on the direction of Admiral Group i.e., Admiral Group and Interconnection Electric go up and down completely randomly.
Pair Corralation between Admiral Group and Interconnection Electric
Assuming the 90 days horizon Admiral Group PLC is expected to under-perform the Interconnection Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Admiral Group PLC is 3.99 times less risky than Interconnection Electric. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Interconnection Electric SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 12,117 in Interconnection Electric SA on January 20, 2024 and sell it today you would lose (776.00) from holding Interconnection Electric SA or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Admiral Group PLC vs. Interconnection Electric SA
Performance |
| Timeline |
| Admiral Group PLC |
| Interconnection Electric |
Admiral Group and Interconnection Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and Interconnection Electric
The main advantage of trading using opposite Admiral Group and Interconnection Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group position performs unexpectedly, Interconnection Electric 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 Interconnection Electric will offset losses from the drop in Interconnection Electric's long position.| Admiral Group vs. Progressive Corp | Admiral Group vs. White Mountains Insurance | Admiral Group vs. Chubb | Admiral Group vs. W R Berkley |
| Interconnection Electric vs. Entergy New Orleans | Interconnection Electric vs. Southern Co | Interconnection Electric vs. Entergy New Orleans |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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