Correlation Between Shenandoah Telecommunicatio and International Business

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and International Business

-0.3

Correlation Coefficient

Shenandoah Telecommunicatio  International Business

Very good diversification

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

Pair Corralation between Shenandoah Telecommunicatio and International Business

Assuming the 90 days horizon Shenandoah Telecommunications is expected to generate 2.9 times more return on investment than International Business. However, Shenandoah Telecommunicatio is 2.9 times more volatile than International Business Machines. It trades about 0.03 of its potential returns per unit of risk. International Business Machines is currently generating about 0.06 per unit of risk. If you would invest  1,171  in Shenandoah Telecommunications on October 7, 2024 and sell it today you would earn a total of  19.00  from holding Shenandoah Telecommunications or generate 1.62% return on investment over 90 days.

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

Shenandoah Telecommunications  vs.  International Business Machine

Shenandoah Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

International Business

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, International Business is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shenandoah Telecommunicatio and International Business

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

The idea behind Shenandoah Telecommunications and International Business Machines 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.