Correlation Between Sparinvest Europa and International Business

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Can any of the company-specific risk be diversified away by investing in both Sparinvest Europa 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 Sparinvest Europa and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparinvest Europa Small and International Business Machines, you can compare the effects of market volatilities on Sparinvest Europa 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 Sparinvest Europa with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparinvest Europa and International Business.

Diversification Opportunities for Sparinvest Europa and International Business

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Sparinvest and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Europa Small and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Sparinvest Europa 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 Sparinvest Europa Small 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 Sparinvest Europa i.e., Sparinvest Europa and International Business go up and down completely randomly.

Pair Corralation between Sparinvest Europa and International Business

If you would invest  11,627  in International Business Machines on December 29, 2023 and sell it today you would earn a total of  7,453  from holding International Business Machines or generate 64.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Sparinvest Europa Small  vs.  International Business Machine

 Performance 
       Timeline  
Sparinvest Europa Small 

Risk-Adjusted Performance

0 of 100

 
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Very Weak
Over the last 90 days Sparinvest Europa Small has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Sparinvest Europa is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
International Business 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Sparinvest Europa and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sparinvest Europa and International Business

The main advantage of trading using opposite Sparinvest Europa and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparinvest Europa 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 Sparinvest Europa Small 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.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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