Correlation Between International Business and Main International
Can any of the company-specific risk be diversified away by investing in both International Business and Main International 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 Main International 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 Main International ETF, you can compare the effects of market volatilities on International Business and Main International 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 Main International. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Main International.
Diversification Opportunities for International Business and Main International
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Main is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Main International ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main International ETF 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 Main International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main International ETF has no effect on the direction of International Business i.e., International Business and Main International go up and down completely randomly.
Pair Corralation between International Business and Main International
Considering the 90-day investment horizon International Business Machines is expected to generate 1.35 times more return on investment than Main International. However, International Business is 1.35 times more volatile than Main International ETF. It trades about 0.21 of its potential returns per unit of risk. Main International ETF is currently generating about 0.01 per unit of risk. If you would invest 16,257 in International Business Machines on August 31, 2024 and sell it today you would earn a total of 6,484 from holding International Business Machines or generate 39.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Main International ETF
Performance |
| Timeline |
| International Business |
| Main International ETF |
International Business and Main International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Main International
The main advantage of trading using opposite International Business and Main International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Main International 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 Main International will offset losses from the drop in Main International's long position.| International Business vs. RLJ Lodging Trust | International Business vs. Aquagold International | International Business vs. Stepstone Group | International Business vs. Morningstar Unconstrained Allocation |
| Main International vs. ADTRAN Inc | Main International vs. International Business Machines | Main International vs. Integrated Ventures | Main International vs. Harmonic |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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