Correlation Between International Business and Converge Technology
Can any of the company-specific risk be diversified away by investing in both International Business and Converge Technology 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 Converge Technology 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 Converge Technology Solutions, you can compare the effects of market volatilities on International Business and Converge Technology 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 Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Converge Technology.
Diversification Opportunities for International Business and Converge Technology
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between International and Converge is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology 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 Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of International Business i.e., International Business and Converge Technology go up and down completely randomly.
Pair Corralation between International Business and Converge Technology
Considering the 90-day investment horizon International Business Machines is expected to generate 0.48 times more return on investment than Converge Technology. However, International Business Machines is 2.08 times less risky than Converge Technology. It trades about 0.35 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about 0.16 per unit of risk. If you would invest 20,662 in International Business Machines on September 2, 2024 and sell it today you would earn a total of 2,079 from holding International Business Machines or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Converge Technology Solutions
Performance |
| Timeline |
| International Business |
| Converge Technology |
International Business and Converge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Converge Technology
The main advantage of trading using opposite International Business and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Converge Technology 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 Converge Technology will offset losses from the drop in Converge Technology's long position.| International Business vs. EPAM Systems | International Business vs. Infosys Ltd ADR | International Business vs. Cognizant Technology Solutions | International Business vs. FiscalNote Holdings |
| Converge Technology vs. The Travelers Companies | Converge Technology vs. Walt Disney | Converge Technology vs. Home Depot | Converge Technology vs. Procter Gamble |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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