Correlation Between International Business and High Arctic
Can any of the company-specific risk be diversified away by investing in both International Business and High Arctic 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 High Arctic 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 High Arctic Energy, you can compare the effects of market volatilities on International Business and High Arctic 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 High Arctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and High Arctic.
Diversification Opportunities for International Business and High Arctic
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and High is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and High Arctic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Arctic Energy 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 High Arctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Arctic Energy has no effect on the direction of International Business i.e., International Business and High Arctic go up and down completely randomly.
Pair Corralation between International Business and High Arctic
Considering the 90-day investment horizon International Business is expected to generate 21.39 times less return on investment than High Arctic. But when comparing it to its historical volatility, International Business Machines is 25.21 times less risky than High Arctic. It trades about 0.1 of its potential returns per unit of risk. High Arctic Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 241.00 in High Arctic Energy on September 3, 2024 and sell it today you would lose (160.00) from holding High Arctic Energy or give up 66.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.78% |
| Values | Daily Returns |
International Business Machine vs. High Arctic Energy
Performance |
| Timeline |
| International Business |
| High Arctic Energy |
International Business and High Arctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and High Arctic
The main advantage of trading using opposite International Business and High Arctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, High Arctic 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 High Arctic will offset losses from the drop in High Arctic's long position.| International Business vs. Partner Communications | International Business vs. Merck Company | International Business vs. Western Midstream Partners | International Business vs. Edgewise Therapeutics |
| High Arctic vs. Seadrill Limited | High Arctic vs. Noble plc | High Arctic vs. Borr Drilling | High Arctic vs. SCOR PK |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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