Correlation Between International Paper and Virco Manufacturing
Can any of the company-specific risk be diversified away by investing in both International Paper and Virco Manufacturing 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 Virco Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Virco Manufacturing, you can compare the effects of market volatilities on International Paper and Virco Manufacturing 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 Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Virco Manufacturing.
Diversification Opportunities for International Paper and Virco Manufacturing
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between International and Virco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of International Paper i.e., International Paper and Virco Manufacturing go up and down completely randomly.
Pair Corralation between International Paper and Virco Manufacturing
Allowing for the 90-day total investment horizon International Paper is expected to generate 2.59 times less return on investment than Virco Manufacturing. But when comparing it to its historical volatility, International Paper is 2.19 times less risky than Virco Manufacturing. It trades about 0.07 of its potential returns per unit of risk. Virco Manufacturing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 424.00 in Virco Manufacturing on August 26, 2024 and sell it today you would earn a total of 1,159 from holding Virco Manufacturing or generate 273.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Paper vs. Virco Manufacturing
Performance |
| Timeline |
| International Paper |
| Virco Manufacturing |
International Paper and Virco Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Virco Manufacturing
The main advantage of trading using opposite International Paper and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Global Correlations Find global opportunities by holding instruments from different markets |