Correlation Between International Business and Wallbox NV

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

Diversification Opportunities for International Business and Wallbox NV

-0.3

Correlation Coefficient

International Business  Wallbox NV

Very good diversification

The 3 months correlation between International and Wallbox is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Wallbox NV WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbox NV WT 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 Wallbox NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbox NV WT has no effect on the direction of International Business i.e., International Business and Wallbox NV go up and down completely randomly.

Pair Corralation between International Business and Wallbox NV

Considering the 90-day investment horizon International Business is expected to generate 10.34 times less return on investment than Wallbox NV. But when comparing it to its historical volatility, International Business Machines is 17.11 times less risky than Wallbox NV. It trades about 0.09 of its potential returns per unit of risk. Wallbox NV WT is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Wallbox NV WT on October 8, 2024 and sell it today you would lose (66.00) from holding Wallbox NV WT or give up 95.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.31%
Values	Daily Returns

International Business Machine  vs.  Wallbox NV WT

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 current stock price disarray, may contribute to short-term losses for the investors.

Wallbox NV WT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wallbox NV WT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Wallbox NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Business and Wallbox NV

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

The idea behind International Business Machines and Wallbox NV WT 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.