Correlation Between Brockhaus Capital and International Business

Can any of the company-specific risk be diversified away by investing in both Brockhaus Capital 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 Brockhaus Capital and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brockhaus Capital Management and International Business Machines, you can compare the effects of market volatilities on Brockhaus Capital 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 Brockhaus Capital with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brockhaus Capital and International Business.

Diversification Opportunities for Brockhaus Capital and International Business

-0.35

Correlation Coefficient

Brockhaus Capital  International Business

Very good diversification

The 3 months correlation between Brockhaus and International is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and International Business go up and down completely randomly.

Pair Corralation between Brockhaus Capital and International Business

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the International Business. In addition to that, Brockhaus Capital is 1.44 times more volatile than International Business Machines. It trades about -0.13 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.15 per unit of volatility. If you would invest  18,890  in International Business Machines on September 12, 2024 and sell it today you would earn a total of  3,135  from holding International Business Machines or generate 16.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Brockhaus Capital Management  vs.  International Business Machine

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

International Business

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brockhaus Capital and International Business

The main advantage of trading using opposite Brockhaus Capital and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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.

The idea behind Brockhaus Capital Management 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.