Correlation Between International Investors and Stock Index
Can any of the company-specific risk be diversified away by investing in both International Investors and Stock Index 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 Investors and Stock Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Stock Index Fund, you can compare the effects of market volatilities on International Investors and Stock Index 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 Investors with a short position of Stock Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Stock Index.
Diversification Opportunities for International Investors and Stock Index
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Stock is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Stock Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Index Fund and International Investors 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 Investors Gold are associated (or correlated) with Stock Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Index Fund has no effect on the direction of International Investors i.e., International Investors and Stock Index go up and down completely randomly.
Pair Corralation between International Investors and Stock Index
Assuming the 90 days horizon International Investors Gold is expected to generate 1.6 times more return on investment than Stock Index. However, International Investors is 1.6 times more volatile than Stock Index Fund. It trades about 0.33 of its potential returns per unit of risk. Stock Index Fund is currently generating about 0.08 per unit of risk. If you would invest 843.00 in International Investors Gold on October 24, 2024 and sell it today you would earn a total of 76.00 from holding International Investors Gold or generate 9.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
International Investors Gold vs. Stock Index Fund
Performance |
Timeline |
International Investors |
Stock Index Fund |
International Investors and Stock Index Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Investors and Stock Index
The main advantage of trading using opposite International Investors and Stock Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors position performs unexpectedly, Stock Index 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 Stock Index will offset losses from the drop in Stock Index's long position.International Investors vs. Transamerica Intermediate Muni | International Investors vs. T Rowe Price | International Investors vs. Virtus Seix Government | International Investors vs. T Rowe Price |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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