Correlation Between International Paper and Us Global

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

By analyzing existing cross correlation between International Paper and Us Global Investors, you can compare the effects of market volatilities on International Paper and Us Global 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 Us Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Us Global.

Diversification Opportunities for International Paper and Us Global

0.65

Correlation Coefficient

International Paper  Us Global

Poor diversification

The 3 months correlation between International and USLUX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Us Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Investors 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 Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Investors has no effect on the direction of International Paper i.e., International Paper and Us Global go up and down completely randomly.

Pair Corralation between International Paper and Us Global

Allowing for the 90-day total investment horizon International Paper is expected to generate 1.91 times more return on investment than Us Global. However, International Paper is 1.91 times more volatile than Us Global Investors. It trades about 0.01 of its potential returns per unit of risk. Us Global Investors is currently generating about -0.03 per unit of risk. If you would invest  5,321  in International Paper on December 30, 2024 and sell it today you would earn a total of  0.00  from holding International Paper or generate 0.0% return on investment over 90 days.

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

International Paper  vs.  Us Global Investors

International Paper

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Paper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, International Paper is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Us Global Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Global Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Us Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Paper and Us Global

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

The idea behind International Paper and Us Global Investors 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.