Correlation Between Integrated Rail and Continental Beverage

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

By analyzing existing cross correlation between Integrated Rail and and Continental Beverage Brands, you can compare the effects of market volatilities on Integrated Rail and Continental Beverage 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 Integrated Rail with a short position of Continental Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Rail and Continental Beverage.

Diversification Opportunities for Integrated Rail and Continental Beverage

0.24

Correlation Coefficient

Integrated Rail  Continental Beverage

Modest diversification

The 3 months correlation between Integrated and Continental is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Rail and and Continental Beverage Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Beverage and Integrated Rail 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 Integrated Rail and are associated (or correlated) with Continental Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Beverage has no effect on the direction of Integrated Rail i.e., Integrated Rail and Continental Beverage go up and down completely randomly.

Pair Corralation between Integrated Rail and Continental Beverage

If you would invest  20.00  in Continental Beverage Brands on September 3, 2024 and sell it today you would earn a total of  55.00  from holding Continental Beverage Brands or generate 275.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Integrated Rail and  vs.  Continental Beverage Brands

Integrated Rail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Rail and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Integrated Rail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Continental Beverage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Beverage Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Continental Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integrated Rail and Continental Beverage

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

The idea behind Integrated Rail and and Continental Beverage Brands 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 Global Correlations module to find global opportunities by holding instruments from different markets.