Correlation Between International Paper and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both International Paper and Centrais Electricas 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 Paper and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on International Paper and Centrais Electricas 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 Paper with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Centrais Electricas.
Diversification Opportunities for International Paper and Centrais Electricas
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Centrais is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and International Paper 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 Paper are associated (or correlated) with Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of International Paper i.e., International Paper and Centrais Electricas go up and down completely randomly.
Pair Corralation between International Paper and Centrais Electricas
If you would invest 7,600 in International Paper on August 30, 2024 and sell it today you would earn a total of 0.00 from holding International Paper or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 56.52% |
| Values | Daily Returns |
International Paper vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| International Paper |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Centrais Electricas |
International Paper and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Centrais Electricas
The main advantage of trading using opposite International Paper and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' long position.| International Paper vs. Old Dominion Freight | International Paper vs. Getty Copper | International Paper vs. TFI International | International Paper vs. Lindblad Expeditions Holdings |
| Centrais Electricas vs. The Mosaic | Centrais Electricas vs. Luxfer Holdings PLC | Centrais Electricas vs. Pinterest | Centrais Electricas vs. Sensient Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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