Correlation Between International Business and LIFE STORAGE

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

Diversification Opportunities for International Business and LIFE STORAGE

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between International and LIFE STORAGE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and LIFE STORAGE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE STORAGE INC 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 LIFE STORAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE STORAGE INC has no effect on the direction of International Business i.e., International Business and LIFE STORAGE go up and down completely randomly.

Pair Corralation between International Business and LIFE STORAGE

If you would invest  12,563  in International Business Machines on May 17, 2022 and sell it today you would earn a total of  930.00  from holding International Business Machines or generate 7.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

International Business Machine  vs.  LIFE STORAGE INC

 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 relatively steady fundamental drivers, International Business is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

International Price Channel

LIFE STORAGE INC 
LIFE STORAGE Performance
0 of 100
Over the last 90 days LIFE STORAGE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, LIFE STORAGE is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

International Business and LIFE STORAGE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Business and LIFE STORAGE

The main advantage of trading using opposite International Business and LIFE STORAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, LIFE STORAGE 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 LIFE STORAGE will offset losses from the drop in LIFE STORAGE's long position.

International Business Machines

Pair trading matchups for International Business

The idea behind International Business Machines and LIFE STORAGE INC 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.

LIFE STORAGE INC

Pair trading matchups for LIFE STORAGE

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against LIFE STORAGE as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. LIFE STORAGE's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, LIFE STORAGE's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to LIFE STORAGE INC.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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