Correlation Between International Business and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both International Business and Bel Fuse 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 Bel Fuse 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 Bel Fuse A, you can compare the effects of market volatilities on International Business and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Bel Fuse.
Diversification Opportunities for International Business and Bel Fuse
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Bel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of International Business i.e., International Business and Bel Fuse go up and down completely randomly.
Pair Corralation between International Business and Bel Fuse
Considering the 90-day investment horizon International Business is expected to generate 1.67 times less return on investment than Bel Fuse. But when comparing it to its historical volatility, International Business Machines is 1.84 times less risky than Bel Fuse. It trades about 0.11 of its potential returns per unit of risk. Bel Fuse A is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,383 in Bel Fuse A on August 26, 2024 and sell it today you would earn a total of 4,208 from holding Bel Fuse A or generate 78.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
International Business Machine vs. Bel Fuse A
Performance |
| Timeline |
| International Business |
| Bel Fuse A |
International Business and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Bel Fuse
The main advantage of trading using opposite International Business and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| International Business vs. Data Storage Corp | International Business vs. Usio Inc | International Business vs. ARB IOT Group | International Business vs. FiscalNote Holdings |
| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus 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 Stocks Directory module to find actively traded stocks across global markets.
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