Correlation Between International Business and Fact

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

Diversification Opportunities for International Business and Fact

0.0

Correlation Coefficient

International Business  Fact

Pay attention - limited upside

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

Pair Corralation between International Business and Fact

If you would invest  22,188  in International Business Machines on December 20, 2024 and sell it today you would earn a total of  2,144  from holding International Business Machines or generate 9.66% return on investment over 90 days.

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

International Business Machine  vs.  Fact Inc

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 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fact Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fact Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Fact is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with International Business and Fact

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

The idea behind International Business Machines and Fact 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.