Correlation Between International Business and ADGLXY

Can any of the company-specific risk be diversified away by investing in both International Business and ADGLXY 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 ADGLXY 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 ADGLXY 294 30 SEP 40, you can compare the effects of market volatilities on International Business and ADGLXY 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 ADGLXY. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and ADGLXY.

Diversification Opportunities for International Business and ADGLXY

-0.11

Correlation Coefficient

International Business  ADGLXY

Good diversification

The 3 months correlation between International and ADGLXY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and ADGLXY 294 30 SEP 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADGLXY 294 30 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 ADGLXY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADGLXY 294 30 has no effect on the direction of International Business i.e., International Business and ADGLXY go up and down completely randomly.

Pair Corralation between International Business and ADGLXY

Considering the 90-day investment horizon International Business is expected to generate 1.11 times less return on investment than ADGLXY. In addition to that, International Business is 2.85 times more volatile than ADGLXY 294 30 SEP 40. It trades about 0.09 of its total potential returns per unit of risk. ADGLXY 294 30 SEP 40 is currently generating about 0.29 per unit of volatility. If you would invest  7,819  in ADGLXY 294 30 SEP 40 on December 30, 2024 and sell it today you would earn a total of  259.00  from holding ADGLXY 294 30 SEP 40 or generate 3.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	24.19%
Values	Daily Returns

International Business Machine  vs.  ADGLXY 294 30 SEP 40

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

ADGLXY 294 30

Risk-Adjusted Performance

Solid

Over the last 90 days ADGLXY 294 30 SEP 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, ADGLXY sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Business and ADGLXY

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

The idea behind International Business Machines and ADGLXY 294 30 SEP 40 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.