Correlation Between Lexmark International and Industrial Commercial

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

Diversification Opportunities for Lexmark International and Industrial Commercial

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Lexmark and Industrial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lexmark International and Industrial Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Commercial and Lexmark International 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 Lexmark International are associated (or correlated) with Industrial Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Commercial has no effect on the direction of Lexmark International i.e., Lexmark International and Industrial Commercial go up and down completely randomly.

Pair Corralation between Lexmark International and Industrial Commercial

If you would invest (100.00) in Lexmark International on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Lexmark International or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Lexmark International  vs.  Industrial Commercial Bank

 Performance 
       Timeline  
Lexmark International 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Commercial Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Industrial Commercial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lexmark International and Industrial Commercial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lexmark International and Industrial Commercial

The main advantage of trading using opposite Lexmark International and Industrial Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexmark International position performs unexpectedly, Industrial Commercial 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 Industrial Commercial will offset losses from the drop in Industrial Commercial's long position.
The idea behind Lexmark International and Industrial Commercial Bank 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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