Correlation Between International Business and Los Andes
Can any of the company-specific risk be diversified away by investing in both International Business and Los Andes 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 Los Andes 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 Los Andes Copper, you can compare the effects of market volatilities on International Business and Los Andes 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 Los Andes. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Los Andes.
Diversification Opportunities for International Business and Los Andes
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Los is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Los Andes Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Los Andes Copper 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 Los Andes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Los Andes Copper has no effect on the direction of International Business i.e., International Business and Los Andes go up and down completely randomly.
Pair Corralation between International Business and Los Andes
Considering the 90-day investment horizon International Business Machines is expected to generate 0.45 times more return on investment than Los Andes. However, International Business Machines is 2.24 times less risky than Los Andes. It trades about 0.11 of its potential returns per unit of risk. Los Andes Copper is currently generating about -0.02 per unit of risk. If you would invest 15,781 in International Business Machines on September 4, 2024 and sell it today you would earn a total of 6,958 from holding International Business Machines or generate 44.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
International Business Machine vs. Los Andes Copper
Performance |
| Timeline |
| International Business |
| Los Andes Copper |
International Business and Los Andes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Los Andes
The main advantage of trading using opposite International Business and Los Andes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Los Andes 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 Los Andes will offset losses from the drop in Los Andes' long position.| International Business vs. EPAM Systems | International Business vs. Infosys Ltd ADR | International Business vs. Cognizant Technology Solutions | International Business vs. FiscalNote Holdings |
| Los Andes vs. Advantage Solutions | Los Andes vs. Atlas Corp | Los Andes vs. PureCycle Technologies | Los Andes vs. WM Technology |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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