Correlation Between IB Acquisition and GMO Internet
Can any of the company-specific risk be diversified away by investing in both IB Acquisition and GMO Internet 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 IB Acquisition and GMO Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IB Acquisition Corp and GMO Internet, you can compare the effects of market volatilities on IB Acquisition and GMO Internet 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 IB Acquisition with a short position of GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of IB Acquisition and GMO Internet.
Diversification Opportunities for IB Acquisition and GMO Internet
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IBACR and GMO is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding IB Acquisition Corp and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet and IB Acquisition 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 IB Acquisition Corp are associated (or correlated) with GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of IB Acquisition i.e., IB Acquisition and GMO Internet go up and down completely randomly.
Pair Corralation between IB Acquisition and GMO Internet
Assuming the 90 days horizon IB Acquisition Corp is expected to generate 6.73 times more return on investment than GMO Internet. However, IB Acquisition is 6.73 times more volatile than GMO Internet. It trades about 0.01 of its potential returns per unit of risk. GMO Internet is currently generating about -0.16 per unit of risk. If you would invest 6.50 in IB Acquisition Corp on October 9, 2024 and sell it today you would lose (0.49) from holding IB Acquisition Corp or give up 7.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 73.68% |
| Values | Daily Returns |
IB Acquisition Corp vs. GMO Internet
Performance |
| Timeline |
| IB Acquisition Corp |
| GMO Internet |
IB Acquisition and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IB Acquisition and GMO Internet
The main advantage of trading using opposite IB Acquisition and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IB Acquisition position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| IB Acquisition vs. MACOM Technology Solutions | IB Acquisition vs. American Environmental | IB Acquisition vs. Kaiser Aluminum | IB Acquisition vs. Worthington Steel |
| GMO Internet vs. Verizon Communications | GMO Internet vs. ATT Inc | GMO Internet vs. Comcast Corp | GMO Internet vs. Deutsche Telekom AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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