Correlation Between Genworth Financial and International Business

Can any of the company-specific risk be diversified away by investing in both Genworth Financial 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 Genworth Financial and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genworth Financial and International Business Machines, you can compare the effects of market volatilities on Genworth Financial 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 Genworth Financial with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genworth Financial and International Business.

Diversification Opportunities for Genworth Financial and International Business

0.55

Correlation Coefficient

Genworth Financial  International Business

Very weak diversification

The 3 months correlation between Genworth and International is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Genworth Financial and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Genworth Financial 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 Genworth Financial 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 Genworth Financial i.e., Genworth Financial and International Business go up and down completely randomly.

Pair Corralation between Genworth Financial and International Business

Considering the 90-day investment horizon Genworth Financial is expected to generate 0.61 times more return on investment than International Business. However, Genworth Financial is 1.64 times less risky than International Business. It trades about -0.28 of its potential returns per unit of risk. International Business Machines is currently generating about -0.31 per unit of risk. If you would invest  643.00  in Genworth Financial on January 28, 2024 and sell it today you would lose (44.00) from holding Genworth Financial or give up 6.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Genworth Financial  vs.  International Business Machine

Genworth Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genworth Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Genworth Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Genworth Financial and International Business

The main advantage of trading using opposite Genworth Financial and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genworth Financial 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 Genworth Financial 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.