Correlation Between International Business and ETC On
Can any of the company-specific risk be diversified away by investing in both International Business and ETC On 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 International Business and ETC On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and ETC on CMCI, you can compare the effects of market volatilities on International Business and ETC On 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 International Business with a short position of ETC On. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and ETC On.
Diversification Opportunities for International Business and ETC On
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and ETC is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and ETC on CMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC on CMCI and International Business 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 International Business Machines are associated (or correlated) with ETC On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC on CMCI has no effect on the direction of International Business i.e., International Business and ETC On go up and down completely randomly.
Pair Corralation between International Business and ETC On
Assuming the 90 days trading horizon International Business Machines is expected to generate 2.86 times more return on investment than ETC On. However, International Business is 2.86 times more volatile than ETC on CMCI. It trades about 0.02 of its potential returns per unit of risk. ETC on CMCI is currently generating about 0.02 per unit of risk. If you would invest 10,780 in International Business Machines on August 26, 2024 and sell it today you would earn a total of 1,115 from holding International Business Machines or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.0% |
| Values | Daily Returns |
International Business Machine vs. ETC on CMCI
Performance |
| Timeline |
| International Business |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ETC on CMCI |
International Business and ETC On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and ETC On
The main advantage of trading using opposite International Business and ETC On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, ETC On 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 ETC On will offset losses from the drop in ETC On's long position.| International Business vs. Westlake Chemical Corp | International Business vs. Charter Communications Cl | International Business vs. Global Net Lease | International Business vs. Capital Drilling |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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