Correlation Between INTERSHOP Communications and Barrett Business

Can any of the company-specific risk be diversified away by investing in both INTERSHOP Communications and Barrett Business 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 INTERSHOP Communications and Barrett Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTERSHOP Communications Aktiengesellschaft and Barrett Business Services, you can compare the effects of market volatilities on INTERSHOP Communications and Barrett Business 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 INTERSHOP Communications with a short position of Barrett Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and Barrett Business.

Diversification Opportunities for INTERSHOP Communications and Barrett Business

-0.39

Correlation Coefficient

INTERSHOP Communications  Barrett Business

Very good diversification

The 3 months correlation between INTERSHOP and Barrett is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services and INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft are associated (or correlated) with Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Barrett Business go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Barrett Business

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the Barrett Business. In addition to that, INTERSHOP Communications is 1.13 times more volatile than Barrett Business Services. It trades about -0.08 of its total potential returns per unit of risk. Barrett Business Services is currently generating about 0.24 per unit of volatility. If you would invest  3,313  in Barrett Business Services on October 25, 2024 and sell it today you would earn a total of  907.00  from holding Barrett Business Services or generate 27.38% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Barrett Business Services

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERSHOP Communications Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Barrett Business Services

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barrett Business Services are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Barrett Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and Barrett Business

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Barrett Business Services 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.