Correlation Between International Business and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both International Business and Johnson Controls 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 Johnson Controls 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 Johnson Controls International, you can compare the effects of market volatilities on International Business and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Johnson Controls.
Diversification Opportunities for International Business and Johnson Controls
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Johnson is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of International Business i.e., International Business and Johnson Controls go up and down completely randomly.
Pair Corralation between International Business and Johnson Controls
Considering the 90-day investment horizon International Business Machines is expected to generate 0.71 times more return on investment than Johnson Controls. However, International Business Machines is 1.4 times less risky than Johnson Controls. It trades about 0.08 of its potential returns per unit of risk. Johnson Controls International 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 | Insignificant |
Accuracy | 98.8% |
Values | Daily Returns |
International Business Machine vs. Johnson Controls International
Performance |
Timeline |
International Business |
Johnson Controls Int |
International Business and Johnson Controls Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Business and Johnson Controls
The main advantage of trading using opposite International Business and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.International Business vs. EPAM Systems | International Business vs. Cognizant Technology Solutions | International Business vs. Fiserv Inc | International Business vs. FiscalNote Holdings |
Johnson Controls vs. Vinci S A | Johnson Controls vs. China Railway Group | Johnson Controls vs. China Communications Construction | Johnson Controls vs. WSP Global |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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