Correlation Between International Business and CORNERSTONE

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

Diversification Opportunities for International Business and CORNERSTONE

0.59

Correlation Coefficient

International Business  CORNERSTONE

Very weak diversification

The 3 months correlation between International and CORNERSTONE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and CORNERSTONE BLDG BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORNERSTONE BLDG BRANDS 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 CORNERSTONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORNERSTONE BLDG BRANDS has no effect on the direction of International Business i.e., International Business and CORNERSTONE go up and down completely randomly.

Pair Corralation between International Business and CORNERSTONE

Considering the 90-day investment horizon International Business Machines is expected to generate 0.99 times more return on investment than CORNERSTONE. However, International Business Machines is 1.01 times less risky than CORNERSTONE. It trades about 0.14 of its potential returns per unit of risk. CORNERSTONE BLDG BRANDS is currently generating about 0.11 per unit of risk. If you would invest  20,252  in International Business Machines on September 4, 2024 and sell it today you would earn a total of  2,487  from holding International Business Machines or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	76.56%
Values	Daily Returns

International Business Machine  vs.  CORNERSTONE BLDG BRANDS

International Business

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 10 (%) 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 January 2025.

CORNERSTONE BLDG BRANDS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CORNERSTONE BLDG BRANDS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CORNERSTONE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with International Business and CORNERSTONE

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

The idea behind International Business Machines and CORNERSTONE BLDG BRANDS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.