Correlation Between International Paper and Millennium Group

Can any of the company-specific risk be diversified away by investing in both International Paper and Millennium Group 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 Paper and Millennium Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Paper and Millennium Group International, you can compare the effects of market volatilities on International Paper and Millennium Group 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 Paper with a short position of Millennium Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Millennium Group.

Diversification Opportunities for International Paper and Millennium Group

-0.33

Correlation Coefficient

International Paper  Millennium Group

Very good diversification

The 3 months correlation between International and Millennium is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Millennium Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Group Int and International Paper 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 Paper are associated (or correlated) with Millennium Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Group Int has no effect on the direction of International Paper i.e., International Paper and Millennium Group go up and down completely randomly.

Pair Corralation between International Paper and Millennium Group

Allowing for the 90-day total investment horizon International Paper is expected to generate 4.84 times less return on investment than Millennium Group. But when comparing it to its historical volatility, International Paper is 5.81 times less risky than Millennium Group. It trades about 0.1 of its potential returns per unit of risk. Millennium Group International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  178.00  in Millennium Group International on September 30, 2024 and sell it today you would earn a total of  63.00  from holding Millennium Group International or generate 35.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

International Paper  vs.  Millennium Group International

International Paper

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Paper are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, International Paper reported solid returns over the last few months and may actually be approaching a breakup point.

Millennium Group Int

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Millennium Group International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Millennium Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Paper and Millennium Group

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

The idea behind International Paper and Millennium Group International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.