Correlation Between IBU-tec Advanced and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both IBU-tec Advanced and SEALED AIR 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 IBU-tec Advanced and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBU tec advanced materials and SEALED AIR , you can compare the effects of market volatilities on IBU-tec Advanced and SEALED AIR 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 IBU-tec Advanced with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBU-tec Advanced and SEALED AIR.
Diversification Opportunities for IBU-tec Advanced and SEALED AIR
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBU-tec and SEALED is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IBU tec advanced materials and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and IBU-tec Advanced 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 IBU tec advanced materials are associated (or correlated) with SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of IBU-tec Advanced i.e., IBU-tec Advanced and SEALED AIR go up and down completely randomly.
Pair Corralation between IBU-tec Advanced and SEALED AIR
Assuming the 90 days trading horizon IBU tec advanced materials is expected to generate 1.2 times more return on investment than SEALED AIR. However, IBU-tec Advanced is 1.2 times more volatile than SEALED AIR . It trades about -0.08 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.17 per unit of risk. If you would invest 634.00 in IBU tec advanced materials on December 12, 2024 and sell it today you would lose (54.00) from holding IBU tec advanced materials or give up 8.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBU tec advanced materials vs. SEALED AIR
Performance |
| Timeline |
| IBU tec advanced |
| SEALED AIR |
IBU-tec Advanced and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBU-tec Advanced and SEALED AIR
The main advantage of trading using opposite IBU-tec Advanced and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBU-tec Advanced position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR's long position.| IBU-tec Advanced vs. PSI Software AG | ||
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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