Correlation Between International Paper and O I
Can any of the company-specific risk be diversified away by investing in both International Paper and O I 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 Paper and O I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and O I Glass, you can compare the effects of market volatilities on International Paper and O I 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 Paper with a short position of O I. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and O I.
Diversification Opportunities for International Paper and O I
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and O I is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass and International Paper 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 Paper are associated (or correlated) with O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of International Paper i.e., International Paper and O I go up and down completely randomly.
Pair Corralation between International Paper and O I
Allowing for the 90-day total investment horizon International Paper is expected to under-perform the O I. But the stock apears to be less risky and, when comparing its historical volatility, International Paper is 1.47 times less risky than O I. The stock trades about -0.44 of its potential returns per unit of risk. The O I Glass is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,555 in O I Glass on January 25, 2024 and sell it today you would lose (70.00) from holding O I Glass or give up 4.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
International Paper vs. O I Glass
Performance |
Timeline |
International Paper |
O I Glass |
International Paper and O I Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Paper and O I
The main advantage of trading using opposite International Paper and O I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, O I 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 O I will offset losses from the drop in O I's long position.International Paper vs. Reynolds Consumer Products | International Paper vs. Ball Corporation | International Paper vs. Crown Holdings | International Paper vs. Myers Industries |
O I vs. Karat Packaging | O I vs. Reynolds Consumer Products | O I vs. Pactiv Evergreen | O I vs. Packaging Corp of |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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