Correlation Between International Business and CGI
Can any of the company-specific risk be diversified away by investing in both International Business and CGI 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 Business and CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and CGI Inc, you can compare the effects of market volatilities on International Business and CGI 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 Business with a short position of CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and CGI.
Diversification Opportunities for International Business and CGI
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and CGI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and International Business 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 Business Machines are associated (or correlated) with CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of International Business i.e., International Business and CGI go up and down completely randomly.
Pair Corralation between International Business and CGI
Considering the 90-day investment horizon International Business Machines is expected to generate 0.96 times more return on investment than CGI. However, International Business Machines is 1.04 times less risky than CGI. It trades about 0.07 of its potential returns per unit of risk. CGI Inc is currently generating about 0.05 per unit of risk. If you would invest 12,111 in International Business Machines on January 20, 2024 and sell it today you would earn a total of 6,036 from holding International Business Machines or generate 49.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
International Business Machine vs. CGI Inc
Performance |
| Timeline |
| International Business |
| CGI Inc |
International Business and CGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and CGI
The main advantage of trading using opposite International Business and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, CGI 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 CGI will offset losses from the drop in CGI's long position.| International Business vs. Information Services Group | International Business vs. Home Bancorp | International Business vs. CRA International | International Business vs. Aquagold International |
| CGI vs. Information Services Group | CGI vs. Home Bancorp | CGI vs. CRA International | CGI vs. Aquagold International |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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