Correlation Between International Business and Unit
Can any of the company-specific risk be diversified away by investing in both International Business and Unit 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 Unit 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 Unit Corporation, you can compare the effects of market volatilities on International Business and Unit 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 Unit. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Unit.
Diversification Opportunities for International Business and Unit
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Unit is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit 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 Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of International Business i.e., International Business and Unit go up and down completely randomly.
Pair Corralation between International Business and Unit
Considering the 90-day investment horizon International Business is expected to generate 15.29 times less return on investment than Unit. But when comparing it to its historical volatility, International Business Machines is 13.26 times less risky than Unit. It trades about 0.22 of its potential returns per unit of risk. Unit Corporation is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Unit Corporation on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Unit Corporation or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.67% |
| Values | Daily Returns |
International Business Machine vs. Unit Corp.
Performance |
| Timeline |
| International Business |
| Unit |
International Business and Unit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Unit
The main advantage of trading using opposite International Business and Unit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Unit 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 Unit will offset losses from the drop in Unit'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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