Correlation Between Intermediate Capital and Calculus VCT

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

By analyzing existing cross correlation between Intermediate Capital Group and Calculus VCT plc, you can compare the effects of market volatilities on Intermediate Capital and Calculus VCT 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 Intermediate Capital with a short position of Calculus VCT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Calculus VCT.

Diversification Opportunities for Intermediate Capital and Calculus VCT

0.03

Correlation Coefficient

Intermediate Capital  Calculus VCT

Significant diversification

The 3 months correlation between Intermediate and Calculus is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Calculus VCT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calculus VCT plc and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Calculus VCT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calculus VCT plc has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Calculus VCT go up and down completely randomly.

Pair Corralation between Intermediate Capital and Calculus VCT

Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 1.25 times more return on investment than Calculus VCT. However, Intermediate Capital is 1.25 times more volatile than Calculus VCT plc. It trades about -0.08 of its potential returns per unit of risk. Calculus VCT plc is currently generating about -0.13 per unit of risk. If you would invest  231,598  in Intermediate Capital Group on September 26, 2024 and sell it today you would lose (23,598) from holding Intermediate Capital Group or give up 10.19% of portfolio value over 90 days.

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

Intermediate Capital Group  vs.  Calculus VCT plc

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Calculus VCT plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calculus VCT plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Intermediate Capital and Calculus VCT

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

The idea behind Intermediate Capital Group and Calculus VCT plc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.