Correlation Between International Business and Extended Dur

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

Diversification Opportunities for International Business and Extended Dur

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between International and Extended is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Extended Dur Trs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Dur Trs and International Business 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 Business Machines are associated (or correlated) with Extended Dur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Dur Trs has no effect on the direction of International Business i.e., International Business and Extended Dur go up and down completely randomly.

Pair Corralation between International Business and Extended Dur

Considering the 90-day investment horizon International Business Machines is expected to under-perform the Extended Dur. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 1.25 times less risky than Extended Dur. The stock trades about -0.33 of its potential returns per unit of risk. The Extended Dur Trs is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  9,735  in Extended Dur Trs on June 26, 2022 and sell it today you would lose (673.00)  from holding Extended Dur Trs or give up 6.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

International Business Machine  vs.  Extended Dur Trs

 Performance (%) 
       Timeline  
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 weak performance in the last few months, the Stock's fundamental drivers remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

International Price Channel

Extended Dur Trs 
Extended Performance
0 of 100
Over the last 90 days Extended Dur Trs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Extended Dur is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Extended Price Channel

International Business and Extended Dur Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Business and Extended Dur

The main advantage of trading using opposite International Business and Extended Dur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Extended Dur 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 Extended Dur will offset losses from the drop in Extended Dur's long position.
International Business vs. Industrias Bachoco SA
The idea behind International Business Machines and Extended Dur Trs 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.
Extended Dur vs. International Business Machines
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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