Correlation Between Highwood Asset and International Business

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

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

Diversification Opportunities for Highwood Asset and International Business

-0.39

Correlation Coefficient

Highwood Asset  International Business

Very good diversification

The 3 months correlation between Highwood and International is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset 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 Highwood Asset 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 Highwood Asset 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 Highwood Asset i.e., Highwood Asset and International Business go up and down completely randomly.

Pair Corralation between Highwood Asset and International Business

Assuming the 90 days horizon Highwood Asset is expected to generate 31.53 times less return on investment than International Business. In addition to that, Highwood Asset is 1.02 times more volatile than International Business Machines. It trades about 0.0 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.1 per unit of volatility. If you would invest  3,396  in International Business Machines on December 25, 2024 and sell it today you would earn a total of  418.00  from holding International Business Machines or generate 12.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Highwood Asset Management  vs.  International Business Machine

Highwood Asset Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highwood Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

International Business

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highwood Asset and International Business

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

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.