Correlation Between Intuitive Machines and London Stock

Can any of the company-specific risk be diversified away by investing in both Intuitive Machines and London Stock 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 Intuitive Machines and London Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intuitive Machines and London Stock Exchange, you can compare the effects of market volatilities on Intuitive Machines and London Stock 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 Intuitive Machines with a short position of London Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Machines and London Stock.

Diversification Opportunities for Intuitive Machines and London Stock

0.64

Correlation Coefficient

Intuitive Machines  London Stock

Poor diversification

The 3 months correlation between Intuitive and London is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines and London Stock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Stock Exchange and Intuitive Machines 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 Intuitive Machines are associated (or correlated) with London Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Stock Exchange has no effect on the direction of Intuitive Machines i.e., Intuitive Machines and London Stock go up and down completely randomly.

Pair Corralation between Intuitive Machines and London Stock

Given the investment horizon of 90 days Intuitive Machines is expected to generate 6.08 times more return on investment than London Stock. However, Intuitive Machines is 6.08 times more volatile than London Stock Exchange. It trades about 0.15 of its potential returns per unit of risk. London Stock Exchange is currently generating about 0.22 per unit of risk. If you would invest  1,168  in Intuitive Machines on September 19, 2024 and sell it today you would earn a total of  221.00  from holding Intuitive Machines or generate 18.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Intuitive Machines  vs.  London Stock Exchange

Intuitive Machines

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

London Stock Exchange

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in London Stock Exchange are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, London Stock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intuitive Machines and London Stock

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

The idea behind Intuitive Machines and London Stock Exchange 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.