Correlation Between International Business and WAVD Old

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

Diversification Opportunities for International Business and WAVD Old

0.0

Correlation Coefficient

International Business  WAVD Old

Pay attention - limited upside

The 3 months correlation between International and WAVD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and WAVD Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WAVD Old 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 WAVD Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WAVD Old has no effect on the direction of International Business i.e., International Business and WAVD Old go up and down completely randomly.

Pair Corralation between International Business and WAVD Old

Considering the 90-day investment horizon International Business is expected to generate 1.01 times less return on investment than WAVD Old. But when comparing it to its historical volatility, International Business Machines is 10.22 times less risky than WAVD Old. It trades about 0.1 of its potential returns per unit of risk. WAVD Old is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,950  in WAVD Old on October 27, 2024 and sell it today you would lose (1,950) from holding WAVD Old or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	77.53%
Values	Daily Returns

International Business Machine  vs.  WAVD Old

International Business

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in February 2025.

WAVD Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WAVD Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WAVD Old is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with International Business and WAVD Old

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

The idea behind International Business Machines and WAVD Old 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.