Correlation Between Spotify Technology and Intermediate Capital

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

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

Diversification Opportunities for Spotify Technology and Intermediate Capital

0.69

Correlation Coefficient

Spotify Technology  Intermediate Capital

Poor diversification

The 3 months correlation between Spotify and Intermediate is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Spotify Technology i.e., Spotify Technology and Intermediate Capital go up and down completely randomly.

Pair Corralation between Spotify Technology and Intermediate Capital

Assuming the 90 days trading horizon Spotify Technology is expected to generate 1.64 times less return on investment than Intermediate Capital. In addition to that, Spotify Technology is 1.33 times more volatile than Intermediate Capital Group. It trades about 0.1 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.23 per unit of volatility. If you would invest  169,946  in Intermediate Capital Group on April 20, 2025 and sell it today you would earn a total of  45,654  from holding Intermediate Capital Group or generate 26.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Spotify Technology SA  vs.  Intermediate Capital Group

Spotify Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Intermediate Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Intermediate Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spotify Technology and Intermediate Capital

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

The idea behind Spotify Technology SA and Intermediate 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.