Correlation Between International Business and FTC Solar
Can any of the company-specific risk be diversified away by investing in both International Business and FTC Solar 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 FTC Solar 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 FTC Solar, you can compare the effects of market volatilities on International Business and FTC Solar 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 FTC Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and FTC Solar.
Diversification Opportunities for International Business and FTC Solar
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and FTC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and FTC Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTC Solar 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 FTC Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTC Solar has no effect on the direction of International Business i.e., International Business and FTC Solar go up and down completely randomly.
Pair Corralation between International Business and FTC Solar
Considering the 90-day investment horizon International Business Machines is expected to generate 0.38 times more return on investment than FTC Solar. However, International Business Machines is 2.64 times less risky than FTC Solar. It trades about -0.07 of its potential returns per unit of risk. FTC Solar is currently generating about -0.33 per unit of risk. If you would invest 23,044 in International Business Machines on August 23, 2024 and sell it today you would lose (804.00) from holding International Business Machines or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. FTC Solar
Performance |
| Timeline |
| International Business |
| FTC Solar |
International Business and FTC Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and FTC Solar
The main advantage of trading using opposite International Business and FTC Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, FTC Solar 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 FTC Solar will offset losses from the drop in FTC Solar's long position.| International Business vs. Small Cap Core | International Business vs. Morningstar Unconstrained Allocation | International Business vs. Mutual Of America | International Business vs. Ep Emerging Markets |
| FTC Solar vs. Small Cap Core | FTC Solar vs. Freedom Holding Corp | FTC Solar vs. Gfl Environmental Holdings | FTC Solar vs. Growth Fund Of |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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