Correlation Between International Paper and Cango
Can any of the company-specific risk be diversified away by investing in both International Paper and Cango 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 Cango into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Cango Inc, you can compare the effects of market volatilities on International Paper and Cango 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 Cango. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Cango.
Diversification Opportunities for International Paper and Cango
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Cango is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Cango Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cango Inc 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 Cango. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cango Inc has no effect on the direction of International Paper i.e., International Paper and Cango go up and down completely randomly.
Pair Corralation between International Paper and Cango
Allowing for the 90-day total investment horizon International Paper is expected to generate 4.23 times less return on investment than Cango. But when comparing it to its historical volatility, International Paper is 3.0 times less risky than Cango. It trades about 0.29 of its potential returns per unit of risk. Cango Inc is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Cango Inc on August 24, 2024 and sell it today you would earn a total of 210.00 from holding Cango Inc or generate 116.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Paper vs. Cango Inc
Performance |
| Timeline |
| International Paper |
| Cango Inc |
International Paper and Cango Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Cango
The main advantage of trading using opposite International Paper and Cango positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Cango 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 Cango will offset losses from the drop in Cango's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| Cango vs. Cars Inc | Cango vs. KAR Auction Services | Cango vs. Rush Enterprises B | Cango vs. Rush Enterprises A |
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 Stocks Directory module to find actively traded stocks across global markets.
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