Correlation Between Integral and International Paper
Can any of the company-specific risk be diversified away by investing in both Integral and International Paper 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 Integral and International Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integral Ad Science and International Paper, you can compare the effects of market volatilities on Integral and International Paper 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 Integral with a short position of International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and International Paper.
Diversification Opportunities for Integral and International Paper
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Integral and International is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper and Integral 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 Integral Ad Science are associated (or correlated) with International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of Integral i.e., Integral and International Paper go up and down completely randomly.
Pair Corralation between Integral and International Paper
Considering the 90-day investment horizon Integral Ad Science is expected to generate 1.25 times more return on investment than International Paper. However, Integral is 1.25 times more volatile than International Paper. It trades about 0.02 of its potential returns per unit of risk. International Paper is currently generating about 0.01 per unit of risk. If you would invest 1,014 in Integral Ad Science on November 1, 2024 and sell it today you would earn a total of 36.00 from holding Integral Ad Science or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 51.82% |
| Values | Daily Returns |
Integral Ad Science vs. International Paper
Performance |
| Timeline |
| Integral Ad Science |
| International Paper |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Integral and International Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integral and International Paper
The main advantage of trading using opposite Integral and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral position performs unexpectedly, International Paper 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 Paper will offset losses from the drop in International Paper's long position.The idea behind Integral Ad Science and International Paper 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.| International Paper vs. Solstad Offshore ASA | International Paper vs. Juniata Valley Financial | International Paper vs. Hafnia Limited | International Paper vs. WT Offshore |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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