Pair Correlation Between DOW and International Business

This module allows you to analyze existing cross correlation between DOW and International Business Machines Corporation. You can compare the effects of market volatilities on DOW 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 DOW with a short position of International Business. See also your portfolio center. Please also check ongoing floating volatility patterns of DOW and International Business.
Investment Horizon     30 Days    Login   to change
Symbolsvs
 DOW  vs   International Business Machine
 Performance (%) 
      Timeline 

Pair Volatility

Given the investment horizon of 30 days, DOW is expected to generate 3.58 times less return on investment than International Business. But when comparing it to its historical volatility, DOW is 8.23 times less risky than International Business. It trades about 0.55 of its potential returns per unit of risk. International Business Machines Corporation is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  14,439  in International Business Machines Corporation on September 19, 2017 and sell it today you would earn a total of  1,514  from holding International Business Machines Corporation or generate 10.49% return on investment over 30 days.

Correlation Coefficient

Pair Corralation between DOW and International Business
0.56

Parameters

Time Period1 Month [change]
DirectionPositive 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Diversification

Very weak diversification

Overlapping area represents the amount of risk that can be diversified away by holding DOW and International Business Machine in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on International Business and DOW 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 DOW 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 DOW i.e. DOW and International Business go up and down completely randomly.
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Comparative Volatility

 Predicted Return Density 
      Returns