Correlation Between Blucora and International Business

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Can any of the company-specific risk be diversified away by investing in both Blucora 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 Blucora and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blucora and International Business Machines, you can compare the effects of market volatilities on Blucora 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 Blucora with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blucora and International Business.

Diversification Opportunities for Blucora and International Business

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Blucora and International is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Blucora and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Blucora 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 Blucora 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 Blucora i.e., Blucora and International Business go up and down completely randomly.

Pair Corralation between Blucora and International Business

Given the investment horizon of 90 days Blucora is expected to generate 1.35 times more return on investment than International Business. However, Blucora is 1.35 times more volatile than International Business Machines. It trades about -0.09 of its potential returns per unit of risk. International Business Machines is currently generating about -0.29 per unit of risk. If you would invest  1,999  in Blucora on July 4, 2022 and sell it today you would lose (65.00)  from holding Blucora or give up 3.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Blucora  vs.  International Business Machine

 Performance (%) 
       Timeline  
Blucora 
Blucora Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Blucora are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Blucora is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Blucora Price Channel

International Business 
International Performance
0 of 100
Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental drivers remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

International Price Channel

Blucora and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blucora and International Business

The main advantage of trading using opposite Blucora and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blucora 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.
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The idea behind Blucora and International Business Machines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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