Correlation Between International Business and KraneShares Emerging
Can any of the company-specific risk be diversified away by investing in both International Business and KraneShares Emerging 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 KraneShares Emerging 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 KraneShares Emerging Markets, you can compare the effects of market volatilities on International Business and KraneShares Emerging 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 KraneShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and KraneShares Emerging.
Diversification Opportunities for International Business and KraneShares Emerging
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and KraneShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and KraneShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Emerging 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 KraneShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Emerging has no effect on the direction of International Business i.e., International Business and KraneShares Emerging go up and down completely randomly.
Pair Corralation between International Business and KraneShares Emerging
Considering the 90-day investment horizon International Business Machines is expected to generate 0.86 times more return on investment than KraneShares Emerging. However, International Business Machines is 1.16 times less risky than KraneShares Emerging. It trades about 0.25 of its potential returns per unit of risk. KraneShares Emerging Markets is currently generating about -0.18 per unit of risk. If you would invest 21,125 in International Business Machines on August 29, 2024 and sell it today you would earn a total of 1,758 from holding International Business Machines or generate 8.32% 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. KraneShares Emerging Markets
Performance |
| Timeline |
| International Business |
| KraneShares Emerging |
International Business and KraneShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and KraneShares Emerging
The main advantage of trading using opposite International Business and KraneShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, KraneShares Emerging 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 KraneShares Emerging will offset losses from the drop in KraneShares Emerging's long position.| International Business vs. Data Storage Corp | International Business vs. Usio Inc | International Business vs. ARB IOT Group | International Business vs. FiscalNote Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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