Correlation Between International Consolidated and Aramark Holdings

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

By analyzing existing cross correlation between International Consolidated Companies and Aramark Holdings, you can compare the effects of market volatilities on International Consolidated and Aramark Holdings 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 International Consolidated with a short position of Aramark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Aramark Holdings.

Diversification Opportunities for International Consolidated and Aramark Holdings

-0.23

Correlation Coefficient

International Consolidated  Aramark Holdings

Very good diversification

The 3 months correlation between International and Aramark is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings and International Consolidated 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 International Consolidated Companies are associated (or correlated) with Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of International Consolidated i.e., International Consolidated and Aramark Holdings go up and down completely randomly.

Pair Corralation between International Consolidated and Aramark Holdings

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 139.82 times more return on investment than Aramark Holdings. However, International Consolidated is 139.82 times more volatile than Aramark Holdings. It trades about 0.2 of its potential returns per unit of risk. Aramark Holdings is currently generating about -0.02 per unit of risk. If you would invest  20.00  in International Consolidated Companies on September 28, 2024 and sell it today you would lose (18.40) from holding International Consolidated Companies or give up 92.0% of portfolio value over 90 days.

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

International Consolidated Com  vs.  Aramark Holdings

International Consolidated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aramark Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aramark Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aramark Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with International Consolidated and Aramark Holdings

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

The idea behind International Consolidated Companies and Aramark Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.