Correlation Between BEL Small and INTERCONTINENTAL

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

By analyzing existing cross correlation between BEL Small and INTERCONTINENTAL EXCHANGE, you can compare the effects of market volatilities on BEL Small and INTERCONTINENTAL 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 BEL Small with a short position of INTERCONTINENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEL Small and INTERCONTINENTAL.

Diversification Opportunities for BEL Small and INTERCONTINENTAL

0.0

Correlation Coefficient

BEL Small  INTERCONTINENTAL

Pay attention - limited upside

The 3 months correlation between BEL and INTERCONTINENTAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BEL Small and INTERCONTINENTAL EXCHANGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONTINENTAL EXCHANGE and BEL Small 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 BEL Small are associated (or correlated) with INTERCONTINENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONTINENTAL EXCHANGE has no effect on the direction of BEL Small i.e., BEL Small and INTERCONTINENTAL go up and down completely randomly.

Pair Corralation between BEL Small and INTERCONTINENTAL

If you would invest  0.00  in INTERCONTINENTAL EXCHANGE on September 30, 2024 and sell it today you would earn a total of  0.00  from holding INTERCONTINENTAL EXCHANGE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

BEL Small  vs.  INTERCONTINENTAL EXCHANGE

Pair Trading with BEL Small and INTERCONTINENTAL

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

The idea behind BEL Small and INTERCONTINENTAL EXCHANGE 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.