Correlation Between Associated Capital and Interactive Brokers

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Interactive Brokers 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 Associated Capital and Interactive Brokers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Interactive Brokers Group, you can compare the effects of market volatilities on Associated Capital and Interactive Brokers 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 Associated Capital with a short position of Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Interactive Brokers.

Diversification Opportunities for Associated Capital and Interactive Brokers

0.75

Correlation Coefficient

Associated Capital  Interactive Brokers

Poor diversification

The 3 months correlation between Associated and Interactive is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers and Associated Capital 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 Associated Capital Group are associated (or correlated) with Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Associated Capital i.e., Associated Capital and Interactive Brokers go up and down completely randomly.

Pair Corralation between Associated Capital and Interactive Brokers

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 1.34 times less return on investment than Interactive Brokers. But when comparing it to its historical volatility, Associated Capital Group is 1.46 times less risky than Interactive Brokers. It trades about 0.15 of its potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  17,072  in Interactive Brokers Group on February 8, 2025 and sell it today you would earn a total of  1,488  from holding Interactive Brokers Group or generate 8.72% return on investment over 90 days.

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

Associated Capital Group  vs.  Interactive Brokers Group

Associated Capital

Risk-Adjusted Performance

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 rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Interactive Brokers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interactive Brokers Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Associated Capital and Interactive Brokers

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

The idea behind Associated Capital Group and Interactive Brokers 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.