Correlation Between Kepler Weber and International Business
Can any of the company-specific risk be diversified away by investing in both Kepler Weber 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 Kepler Weber and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kepler Weber SA and International Business Machines, you can compare the effects of market volatilities on Kepler Weber 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 Kepler Weber with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kepler Weber and International Business.
Diversification Opportunities for Kepler Weber and International Business
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kepler and International is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kepler Weber SA and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Kepler Weber 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 Kepler Weber SA 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 Kepler Weber i.e., Kepler Weber and International Business go up and down completely randomly.
Pair Corralation between Kepler Weber and International Business
Assuming the 90 days trading horizon Kepler Weber SA is expected to under-perform the International Business. In addition to that, Kepler Weber is 2.99 times more volatile than International Business Machines. It trades about -0.05 of its total potential returns per unit of risk. International Business Machines is currently generating about -0.12 per unit of volatility. If you would invest 18,850 in International Business Machines on January 26, 2024 and sell it today you would lose (440.00) from holding International Business Machines or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kepler Weber SA vs. International Business Machine
Performance |
| Timeline |
| Kepler Weber SA |
| International Business |
Kepler Weber and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kepler Weber and International Business
The main advantage of trading using opposite Kepler Weber and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kepler Weber 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.| Kepler Weber vs. Engie Brasil Energia | Kepler Weber vs. Fleury SA | Kepler Weber vs. Magazine Luiza SA | Kepler Weber vs. Ambev SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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