Correlation Between International Business and IShares Currency
Can any of the company-specific risk be diversified away by investing in both International Business and IShares Currency 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 IShares Currency 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 iShares Currency Hedged, you can compare the effects of market volatilities on International Business and IShares Currency 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 IShares Currency. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and IShares Currency.
Diversification Opportunities for International Business and IShares Currency
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of International Business i.e., International Business and IShares Currency go up and down completely randomly.
Pair Corralation between International Business and IShares Currency
Considering the 90-day investment horizon International Business Machines is expected to generate 2.36 times more return on investment than IShares Currency. However, International Business is 2.36 times more volatile than iShares Currency Hedged. It trades about 0.35 of its potential returns per unit of risk. iShares Currency Hedged is currently generating about 0.04 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. iShares Currency Hedged
Performance |
| Timeline |
| International Business |
| iShares Currency Hedged |
International Business and IShares Currency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and IShares Currency
The main advantage of trading using opposite International Business and IShares Currency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, IShares Currency 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 IShares Currency will offset losses from the drop in IShares Currency'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 |
| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |