Correlation Between Iridium Communications and IDT

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

By analyzing existing cross correlation between Iridium Communications and IDT Corporation, you can compare the effects of market volatilities on Iridium Communications and IDT 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 Iridium Communications with a short position of IDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and IDT.

Diversification Opportunities for Iridium Communications and IDT

0.48

Correlation Coefficient

Iridium Communications  IDT

Very weak diversification

The 3 months correlation between Iridium and IDT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and IDT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDT Corporation and Iridium Communications 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 Iridium Communications are associated (or correlated) with IDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDT Corporation has no effect on the direction of Iridium Communications i.e., Iridium Communications and IDT go up and down completely randomly.

Pair Corralation between Iridium Communications and IDT

Given the investment horizon of 90 days Iridium Communications is expected to under-perform the IDT. In addition to that, Iridium Communications is 1.29 times more volatile than IDT Corporation. It trades about -0.01 of its total potential returns per unit of risk. IDT Corporation is currently generating about 0.08 per unit of volatility. If you would invest  5,220  in IDT Corporation on May 5, 2025 and sell it today you would earn a total of  588.00  from holding IDT Corporation or generate 11.26% return on investment over 90 days.

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

Iridium Communications  vs.  IDT Corp.

Iridium Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

IDT Corporation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IDT Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, IDT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and IDT

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

The idea behind Iridium Communications and IDT Corporation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.