Correlation Between Intermediate Capital and Livermore Investments

Can any of the company-specific risk be diversified away by investing in both Intermediate Capital and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on Intermediate Capital and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Livermore Investments.

Diversification Opportunities for Intermediate Capital and Livermore Investments

-0.61

Correlation Coefficient

Intermediate Capital  Livermore Investments

Excellent diversification

The 3 months correlation between Intermediate and Livermore is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Livermore Investments go up and down completely randomly.

Pair Corralation between Intermediate Capital and Livermore Investments

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 61.03 times less return on investment than Livermore Investments. In addition to that, Intermediate Capital is 1.32 times more volatile than Livermore Investments Group. It trades about 0.0 of its total potential returns per unit of risk. Livermore Investments Group is currently generating about 0.28 per unit of volatility. If you would invest  3,553  in Livermore Investments Group on September 12, 2024 and sell it today you would earn a total of  997.00  from holding Livermore Investments Group or generate 28.06% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Livermore Investments Group

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Insignificant

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 rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Livermore Investments

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intermediate Capital and Livermore Investments

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

The idea behind Intermediate Capital Group and Livermore Investments Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.