Correlation Between International Business and IShares Short
Can any of the company-specific risk be diversified away by investing in both International Business and IShares Short 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 IShares Short 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 iShares Short Term National, you can compare the effects of market volatilities on International Business and IShares Short 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 IShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and IShares Short.
Diversification Opportunities for International Business and IShares Short
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and iShares Short Term National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Term 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 IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Term has no effect on the direction of International Business i.e., International Business and IShares Short go up and down completely randomly.
Pair Corralation between International Business and IShares Short
Considering the 90-day investment horizon International Business Machines is expected to generate 13.33 times more return on investment than IShares Short. However, International Business is 13.33 times more volatile than iShares Short Term National. It trades about 0.2 of its potential returns per unit of risk. iShares Short Term National is currently generating about 0.21 per unit of risk. If you would invest 16,431 in International Business Machines on August 27, 2024 and sell it today you would earn a total of 6,182 from holding International Business Machines or generate 37.62% 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. iShares Short Term National
Performance |
| Timeline |
| International Business |
| iShares Short Term |
International Business and IShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and IShares Short
The main advantage of trading using opposite International Business and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, IShares Short 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 IShares Short will offset losses from the drop in IShares Short'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 |
| IShares Short vs. iShares New York | IShares Short vs. SPDR Nuveen Bloomberg | IShares Short vs. iShares California Muni | IShares Short vs. iShares National Muni |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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