Correlation Between Investor and 3i Group
Can any of the company-specific risk be diversified away by investing in both Investor and 3i Group 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 Investor and 3i Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB and 3i Group plc, you can compare the effects of market volatilities on Investor and 3i Group 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 Investor with a short position of 3i Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and 3i Group.
Diversification Opportunities for Investor and 3i Group
Very weak diversification
The 3 months correlation between Investor and TGOPF is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB and 3i Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3i Group plc and Investor 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 Investor AB are associated (or correlated) with 3i Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3i Group plc has no effect on the direction of Investor i.e., Investor and 3i Group go up and down completely randomly.
Pair Corralation between Investor and 3i Group
Assuming the 90 days horizon Investor AB is expected to under-perform the 3i Group. In addition to that, Investor is 1.56 times more volatile than 3i Group plc. It trades about -0.29 of its total potential returns per unit of risk. 3i Group plc is currently generating about -0.1 per unit of volatility. If you would invest 3,592 in 3i Group plc on January 25, 2024 and sell it today you would lose (75.00) from holding 3i Group plc or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Investor AB vs. 3i Group plc
Performance |
| Timeline |
| Investor AB |
| 3i Group plc |
Investor and 3i Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and 3i Group
The main advantage of trading using opposite Investor and 3i Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, 3i Group 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 3i Group will offset losses from the drop in 3i Group's long position.| Investor vs. Starfleet Innotech | Investor vs. Flow Capital Corp | Investor vs. Ameritrans Capital Corp | Investor vs. Blackhawk Growth Corp |
| 3i Group vs. Starfleet Innotech | 3i Group vs. Flow Capital Corp | 3i Group vs. Ameritrans Capital Corp | 3i Group vs. Blackhawk Growth Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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