Correlation Between Interactive Brokers and Associated Capital

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Can any of the company-specific risk be diversified away by investing in both Interactive Brokers and Associated Capital 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 Interactive Brokers and Associated Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interactive Brokers Group and Associated Capital Group, you can compare the effects of market volatilities on Interactive Brokers and Associated Capital 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 Interactive Brokers with a short position of Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Brokers and Associated Capital.

Diversification Opportunities for Interactive Brokers and Associated Capital

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Interactive and Associated is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital and Interactive Brokers 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 Interactive Brokers Group are associated (or correlated) with Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Interactive Brokers i.e., Interactive Brokers and Associated Capital go up and down completely randomly.

Pair Corralation between Interactive Brokers and Associated Capital

Given the investment horizon of 90 days Interactive Brokers Group is expected to generate 0.73 times more return on investment than Associated Capital. However, Interactive Brokers Group is 1.37 times less risky than Associated Capital. It trades about 0.21 of its potential returns per unit of risk. Associated Capital Group is currently generating about -0.08 per unit of risk. If you would invest  10,699  in Interactive Brokers Group on December 29, 2023 and sell it today you would earn a total of  444.00  from holding Interactive Brokers Group or generate 4.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Interactive Brokers Group  vs.  Associated Capital Group

 Performance 
       Timeline  
Interactive Brokers 

Risk-Adjusted Performance

27 of 100

 
Low
 
High
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.
Associated Capital 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Interactive Brokers and Associated Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Interactive Brokers and Associated Capital

The main advantage of trading using opposite Interactive Brokers and Associated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interactive Brokers position performs unexpectedly, Associated Capital 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 Associated Capital will offset losses from the drop in Associated Capital's long position.
The idea behind Interactive Brokers Group and Associated Capital 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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