Correlation Between International Paper and Good Natured
Can any of the company-specific risk be diversified away by investing in both International Paper and Good Natured 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 Good Natured into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and good natured Products, you can compare the effects of market volatilities on International Paper and Good Natured 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 Good Natured. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Good Natured.
Diversification Opportunities for International Paper and Good Natured
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Good is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and good natured Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on good natured Products 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 Good Natured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of good natured Products has no effect on the direction of International Paper i.e., International Paper and Good Natured go up and down completely randomly.
Pair Corralation between International Paper and Good Natured
Allowing for the 90-day total investment horizon International Paper is expected to generate 1.96 times less return on investment than Good Natured. But when comparing it to its historical volatility, International Paper is 1.7 times less risky than Good Natured. It trades about 0.21 of its potential returns per unit of risk. good natured Products is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.50 in good natured Products on September 3, 2024 and sell it today you would earn a total of 0.04 from holding good natured Products or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
International Paper vs. good natured Products
Performance |
| Timeline |
| International Paper |
| good natured Products |
International Paper and Good Natured Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Good Natured
The main advantage of trading using opposite International Paper and Good Natured positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Good Natured 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 Good Natured will offset losses from the drop in Good Natured's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| Good Natured vs. DSS Inc | Good Natured vs. Myers Industries | Good Natured vs. O I Glass | Good Natured vs. Pactiv Evergreen |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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