Correlation Between International Business and Parex Resources
Can any of the company-specific risk be diversified away by investing in both International Business and Parex Resources 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 Parex Resources 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 Parex Resources, you can compare the effects of market volatilities on International Business and Parex Resources 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 Parex Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Parex Resources.
Diversification Opportunities for International Business and Parex Resources
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Parex is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources 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 Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of International Business i.e., International Business and Parex Resources go up and down completely randomly.
Pair Corralation between International Business and Parex Resources
Considering the 90-day investment horizon International Business Machines is expected to generate 0.48 times more return on investment than Parex Resources. However, International Business Machines is 2.07 times less risky than Parex Resources. It trades about 0.09 of its potential returns per unit of risk. Parex Resources is currently generating about 0.01 per unit of risk. If you would invest 13,554 in International Business Machines on August 25, 2024 and sell it today you would earn a total of 8,743 from holding International Business Machines or generate 64.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Parex Resources
Performance |
| Timeline |
| International Business |
| Parex Resources |
International Business and Parex Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Parex Resources
The main advantage of trading using opposite International Business and Parex Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Parex Resources 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 Parex Resources will offset losses from the drop in Parex Resources' long position.| International Business vs. Data Storage Corp | International Business vs. Usio Inc | International Business vs. ARB IOT Group | International Business vs. FiscalNote Holdings |
| Parex Resources vs. Petroleo Brasileiro Petrobras | Parex Resources vs. Equinor ASA ADR | Parex Resources vs. Eni SpA ADR | Parex Resources vs. YPF Sociedad Anonima |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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