Correlation Between International Business and Hartford Global

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

Diversification Opportunities for International Business and Hartford Global

0.51

Correlation Coefficient

International Business  Hartford Global

Very weak diversification

The 3 months correlation between International and Hartford is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Hartford Global Impact in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Global Impact 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 Hartford Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Global Impact has no effect on the direction of International Business i.e., International Business and Hartford Global go up and down completely randomly.

Pair Corralation between International Business and Hartford Global

Considering the 90-day investment horizon International Business Machines is expected to generate 1.52 times more return on investment than Hartford Global. However, International Business is 1.52 times more volatile than Hartford Global Impact. It trades about 0.08 of its potential returns per unit of risk. Hartford Global Impact is currently generating about 0.04 per unit of risk. If you would invest  13,414  in International Business Machines on October 4, 2024 and sell it today you would earn a total of  8,486  from holding International Business Machines or generate 63.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

International Business Machine  vs.  Hartford Global Impact

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.

Hartford Global Impact

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Global Impact has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hartford Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Business and Hartford Global

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

The idea behind International Business Machines and Hartford Global Impact 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.