Correlation Between Corporate Office and International Business
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and International Business Machines, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and International Business.
Diversification Opportunities for Corporate Office and International Business
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Corporate and International is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and International Business go up and down completely randomly.
Pair Corralation between Corporate Office and International Business
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the International Business. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Office Properties is 1.23 times less risky than International Business. The stock trades about -0.12 of its potential returns per unit of risk. The International Business Machines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21,230 in International Business Machines on September 23, 2024 and sell it today you would earn a total of 370.00 from holding International Business Machines or generate 1.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Corporate Office Properties vs. International Business Machine
Performance |
Timeline |
Corporate Office Pro |
International Business |
Corporate Office and International Business Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Corporate Office and International Business
The main advantage of trading using opposite Corporate Office and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.Corporate Office vs. Digital Realty Trust | Corporate Office vs. Gecina SA | Corporate Office vs. Japan Real Estate | Corporate Office vs. Mirvac Group |
International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Stocks Directory Find actively traded stocks across global markets | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |