Correlation Between NYSE Composite and International Business
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and International Business 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 NYSE Composite and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and International Business Machines, you can compare the effects of market volatilities on NYSE Composite and International Business 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 NYSE Composite with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and International Business.
Diversification Opportunities for NYSE Composite and International Business
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and International is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and NYSE Composite 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 NYSE Composite are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of NYSE Composite i.e., NYSE Composite and International Business go up and down completely randomly.
Pair Corralation between NYSE Composite and International Business
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the International Business. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 3.13 times less risky than International Business. The index trades about -0.11 of its potential returns per unit of risk. The International Business Machines is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 20,809 in International Business Machines on September 18, 2024 and sell it today you would earn a total of 2,088 from holding International Business Machines or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. International Business Machine
Performance |
| Timeline |
NYSE Composite and International Business Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
International Business Machines
Pair trading matchups for International Business
Pair Trading with NYSE Composite and International Business
The main advantage of trading using opposite NYSE Composite and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| NYSE Composite vs. Siriuspoint | NYSE Composite vs. Fomento Economico Mexicano | NYSE Composite vs. Boston Beer | NYSE Composite vs. Ambev SA ADR |
| International Business vs. Cognizant Technology Solutions | International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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