Correlation Between International Business and Genesis Minerals

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

Diversification Opportunities for International Business and Genesis Minerals

0.17

Correlation Coefficient

International Business  Genesis Minerals

Average diversification

The 3 months correlation between International and Genesis is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Genesis Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Minerals 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 Genesis Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Minerals has no effect on the direction of International Business i.e., International Business and Genesis Minerals go up and down completely randomly.

Pair Corralation between International Business and Genesis Minerals

Considering the 90-day investment horizon International Business is expected to generate 1.52 times less return on investment than Genesis Minerals. But when comparing it to its historical volatility, International Business Machines is 2.21 times less risky than Genesis Minerals. It trades about 0.08 of its potential returns per unit of risk. Genesis Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Genesis Minerals on October 4, 2024 and sell it today you would earn a total of  114.00  from holding Genesis Minerals or generate 85.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

International Business Machine  vs.  Genesis Minerals

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Genesis Minerals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Genesis Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Business and Genesis Minerals

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

The idea behind International Business Machines and Genesis Minerals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.