Correlation Between International Paper and Albany International
Can any of the company-specific risk be diversified away by investing in both International Paper and Albany International 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 Albany International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Albany International, you can compare the effects of market volatilities on International Paper and Albany International 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 Albany International. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Albany International.
Diversification Opportunities for International Paper and Albany International
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between International and Albany is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Albany International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albany International 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 Albany International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albany International has no effect on the direction of International Paper i.e., International Paper and Albany International go up and down completely randomly.
Pair Corralation between International Paper and Albany International
Allowing for the 90-day total investment horizon International Paper is expected to generate 1.0 times more return on investment than Albany International. However, International Paper is 1.0 times more volatile than Albany International. It trades about 0.14 of its potential returns per unit of risk. Albany International is currently generating about -0.02 per unit of risk. If you would invest 3,482 in International Paper on September 1, 2024 and sell it today you would earn a total of 2,401 from holding International Paper or generate 68.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Paper vs. Albany International
Performance |
| Timeline |
| International Paper |
| Albany International |
International Paper and Albany International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Albany International
The main advantage of trading using opposite International Paper and Albany International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Albany International 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 Albany International will offset losses from the drop in Albany International's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| Albany International vs. Culp Inc | Albany International vs. Unifi Inc | Albany International vs. Toray Industries | Albany International vs. International Paper |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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