Correlation Between International Business and Ab Global

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

Diversification Opportunities for International Business and Ab Global

0.02

Correlation Coefficient

International Business  Ab Global

Significant diversification

The 3 months correlation between International and CABNX is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk 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 Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of International Business i.e., International Business and Ab Global go up and down completely randomly.

Pair Corralation between International Business and Ab Global

Considering the 90-day investment horizon International Business Machines is expected to generate 3.32 times more return on investment than Ab Global. However, International Business is 3.32 times more volatile than Ab Global Risk. It trades about 0.1 of its potential returns per unit of risk. Ab Global Risk is currently generating about -0.27 per unit of risk. If you would invest  24,927  in International Business Machines on December 11, 2024 and sell it today you would earn a total of  763.00  from holding International Business Machines or generate 3.06% return on investment over 90 days.

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

International Business Machine  vs.  Ab Global Risk

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 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Ab Global Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Global Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with International Business and Ab Global

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

The idea behind International Business Machines and Ab Global Risk 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.