Correlation Between International Business and Healthequity

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Can any of the company-specific risk be diversified away by investing in both International Business and Healthequity 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 Healthequity 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 Healthequity, you can compare the effects of market volatilities on International Business and Healthequity 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 Healthequity. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Healthequity.

Diversification Opportunities for International Business and Healthequity

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between International and Healthequity is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity 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 Healthequity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthequity has no effect on the direction of International Business i.e., International Business and Healthequity go up and down completely randomly.

Pair Corralation between International Business and Healthequity

Considering the 90-day investment horizon International Business is expected to generate 1.36 times less return on investment than Healthequity. But when comparing it to its historical volatility, International Business Machines is 1.91 times less risky than Healthequity. It trades about 0.14 of its potential returns per unit of risk. Healthequity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,258  in Healthequity on March 30, 2022 and sell it today you would earn a total of  257.00  from holding Healthequity or generate 4.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

International Business Machine  vs.  Healthequity

 Performance (%) 
      Timeline 
International Business 
International Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0465
Payout Ratio
0.68
Last Split Factor
1046:1000
Forward Annual Dividend Rate
6.6
Dividend Date
2022-06-10
Ex Dividend Date
2022-05-09
Last Split Date
2021-11-04

International Price Channel

Healthequity 
Healthequity Performance
0 of 100
Over the last 90 days Healthequity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Healthequity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Healthequity Price Channel

International Business and Healthequity Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with International Business and Healthequity

The main advantage of trading using opposite International Business and Healthequity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Healthequity 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 Healthequity will offset losses from the drop in Healthequity's long position.
The idea behind International Business Machines and Healthequity 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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