Correlation Between International Paper and Southern California
Can any of the company-specific risk be diversified away by investing in both International Paper and Southern California 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 Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Southern California Gas, you can compare the effects of market volatilities on International Paper and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Southern California.
Diversification Opportunities for International Paper and Southern California
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Southern is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Southern California Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California Gas 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California Gas has no effect on the direction of International Paper i.e., International Paper and Southern California go up and down completely randomly.
Pair Corralation between International Paper and Southern California
If you would invest 7,600 in International Paper on September 3, 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 | Insignificant |
| Accuracy | 45.0% |
| Values | Daily Returns |
International Paper vs. Southern California Gas
Performance |
| Timeline |
| International Paper |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Southern California Gas |
International Paper and Southern California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Southern California
The main advantage of trading using opposite International Paper and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.| International Paper vs. Vera Bradley | International Paper vs. SkyWest | International Paper vs. Alaska Air Group | International Paper vs. Burlington Stores |
| Southern California vs. United Rentals | Southern California vs. First Ship Lease | Southern California vs. China Aircraft Leasing | Southern California vs. Playa Hotels Resorts |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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