Correlation Between Industrial Investment and Central Bank

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

By analyzing existing cross correlation between Industrial Investment Trust and Central Bank of, you can compare the effects of market volatilities on Industrial Investment and Central Bank 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 Industrial Investment with a short position of Central Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Central Bank.

Diversification Opportunities for Industrial Investment and Central Bank

-0.7

Correlation Coefficient

Industrial Investment  Central Bank

Excellent diversification

The 3 months correlation between Industrial and Central is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Central Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Bank and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Central Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Bank has no effect on the direction of Industrial Investment i.e., Industrial Investment and Central Bank go up and down completely randomly.

Pair Corralation between Industrial Investment and Central Bank

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.8 times more return on investment than Central Bank. However, Industrial Investment Trust is 1.25 times less risky than Central Bank. It trades about 0.36 of its potential returns per unit of risk. Central Bank of is currently generating about -0.05 per unit of risk. If you would invest  26,220  in Industrial Investment Trust on September 3, 2024 and sell it today you would earn a total of  14,460  from holding Industrial Investment Trust or generate 55.15% return on investment over 90 days.

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

Industrial Investment Trust  vs.  Central Bank of

Industrial Investment

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Central Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Industrial Investment and Central Bank

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

The idea behind Industrial Investment Trust and Central Bank of 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.