Correlation Between International Paper and Rmy Cointreau
Can any of the company-specific risk be diversified away by investing in both International Paper and Rmy Cointreau 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 Rmy Cointreau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Rmy Cointreau SA, you can compare the effects of market volatilities on International Paper and Rmy Cointreau 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 Rmy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Rmy Cointreau.
Diversification Opportunities for International Paper and Rmy Cointreau
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Rmy is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Rmy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmy Cointreau SA 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 Rmy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmy Cointreau SA has no effect on the direction of International Paper i.e., International Paper and Rmy Cointreau go up and down completely randomly.
Pair Corralation between International Paper and Rmy Cointreau
Allowing for the 90-day total investment horizon International Paper is expected to generate 0.65 times more return on investment than Rmy Cointreau. However, International Paper is 1.55 times less risky than Rmy Cointreau. It trades about 0.1 of its potential returns per unit of risk. Rmy Cointreau SA is currently generating about -0.09 per unit of risk. If you would invest 4,738 in International Paper on November 2, 2024 and sell it today you would earn a total of 967.00 from holding International Paper or generate 20.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Paper vs. Rmy Cointreau SA
Performance |
| Timeline |
| International Paper |
| Rmy Cointreau SA |
International Paper and Rmy Cointreau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Rmy Cointreau
The main advantage of trading using opposite International Paper and Rmy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Rmy Cointreau 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 Rmy Cointreau will offset losses from the drop in Rmy Cointreau's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| Rmy Cointreau vs. Remy Cointreau SA | Rmy Cointreau vs. Pernod Ricard SA | Rmy Cointreau vs. Carlsberg AS | Rmy Cointreau vs. Heineken Holding NV |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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