Correlation Between Inter Industries and International Business
Can any of the company-specific risk be diversified away by investing in both Inter Industries 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 Inter Industries and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Industries and International Business Machines, you can compare the effects of market volatilities on Inter Industries 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 Inter Industries with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Industries and International Business.
Diversification Opportunities for Inter Industries and International Business
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Inter and International is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Inter Industries and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Inter Industries 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 Inter Industries 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 Inter Industries i.e., Inter Industries and International Business go up and down completely randomly.
Pair Corralation between Inter Industries and International Business
Assuming the 90 days trading horizon Inter Industries is expected to generate 3.54 times more return on investment than International Business. However, Inter Industries is 3.54 times more volatile than International Business Machines. It trades about 0.38 of its potential returns per unit of risk. International Business Machines is currently generating about -0.12 per unit of risk. If you would invest 24,660 in Inter Industries on January 26, 2024 and sell it today you would earn a total of 5,200 from holding Inter Industries or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Inter Industries vs. International Business Machine
Performance |
| Timeline |
| Inter Industries |
| International Business |
Inter Industries and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Industries and International Business
The main advantage of trading using opposite Inter Industries and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Industries 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.| Inter Industries vs. C Mer Industries | Inter Industries vs. Ralco Agencies | Inter Industries vs. Brimag L |
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 CEOs Directory module to screen CEOs from public companies around the world.
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