Correlation Between International Business and Golden Minerals
Can any of the company-specific risk be diversified away by investing in both International Business and Golden Minerals 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 Golden Minerals 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 Golden Minerals, you can compare the effects of market volatilities on International Business and Golden Minerals 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 Golden Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Golden Minerals.
Diversification Opportunities for International Business and Golden Minerals
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Golden is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals 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 Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of International Business i.e., International Business and Golden Minerals go up and down completely randomly.
Pair Corralation between International Business and Golden Minerals
Assuming the 90 days trading horizon International Business is expected to generate 14.29 times less return on investment than Golden Minerals. But when comparing it to its historical volatility, International Business Machines is 35.04 times less risky than Golden Minerals. It trades about 0.08 of its potential returns per unit of risk. Golden Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 900.00 in Golden Minerals on September 3, 2024 and sell it today you would lose (862.00) from holding Golden Minerals or give up 95.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Golden Minerals
Performance |
| Timeline |
| International Business |
| Golden Minerals |
International Business and Golden Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Golden Minerals
The main advantage of trading using opposite International Business and Golden Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Golden Minerals 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 Golden Minerals will offset losses from the drop in Golden Minerals' long position.| International Business vs. Northstar Clean Technologies | International Business vs. CVW CleanTech | International Business vs. Air Canada | International Business vs. Evertz Technologies Limited |
| Golden Minerals vs. Tristar Gold | Golden Minerals vs. Trilogy Metals | Golden Minerals vs. Hannan Metals | Golden Minerals vs. Lupaka Gold Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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