Correlation Between Internacional and TopBuild Corp

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

By analyzing existing cross correlation between Internacional de Cermica and TopBuild Corp, you can compare the effects of market volatilities on Internacional and TopBuild Corp 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 Internacional with a short position of TopBuild Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internacional and TopBuild Corp.

Diversification Opportunities for Internacional and TopBuild Corp

0.0

Correlation Coefficient

Internacional  TopBuild Corp

Pay attention - limited upside

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

Pair Corralation between Internacional and TopBuild Corp

If you would invest  732,500  in TopBuild Corp on September 5, 2024 and sell it today you would earn a total of  78,259  from holding TopBuild Corp or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Internacional de Cermica  vs.  TopBuild Corp

Internacional de Cermica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Internacional de Cermica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Internacional is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

TopBuild Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TopBuild Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, TopBuild Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Internacional and TopBuild Corp

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

The idea behind Internacional de Cermica and TopBuild Corp 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.