Correlation Between Mount Gibson and International Business
Can any of the company-specific risk be diversified away by investing in both Mount Gibson and International Business 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 Mount Gibson and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and International Business Machines, you can compare the effects of market volatilities on Mount Gibson and International Business 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 Mount Gibson with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and International Business.
Diversification Opportunities for Mount Gibson and International Business
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mount and International is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Mount Gibson i.e., Mount Gibson and International Business go up and down completely randomly.
Pair Corralation between Mount Gibson and International Business
Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the International Business. In addition to that, Mount Gibson is 3.72 times more volatile than International Business Machines. It trades about -0.01 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.09 per unit of volatility. If you would invest 11,948 in International Business Machines on October 13, 2024 and sell it today you would earn a total of 9,447 from holding International Business Machines or generate 79.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. International Business Machine
Performance |
| Timeline |
| Mount Gibson Iron |
| International Business |
Mount Gibson and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and International Business
The main advantage of trading using opposite Mount Gibson and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Mount Gibson vs. Neinor Homes SA | Mount Gibson vs. MHP Hotel AG | Mount Gibson vs. Focus Home Interactive | Mount Gibson vs. 24SEVENOFFICE GROUP AB |
| International Business vs. DEVRY EDUCATION GRP | International Business vs. TAL Education Group | International Business vs. Mount Gibson Iron | International Business vs. Xiwang Special Steel |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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