Correlation Between International Business and Fzdaqx

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

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

Diversification Opportunities for International Business and Fzdaqx

0.65

Correlation Coefficient

International Business  Fzdaqx

Poor diversification

The 3 months correlation between International and Fzdaqx is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Fzdaqx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fzdaqx and International Business 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 Business Machines are associated (or correlated) with Fzdaqx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fzdaqx has no effect on the direction of International Business i.e., International Business and Fzdaqx go up and down completely randomly.

Pair Corralation between International Business and Fzdaqx

Considering the 90-day investment horizon International Business Machines is expected to generate 10.21 times more return on investment than Fzdaqx. However, International Business is 10.21 times more volatile than Fzdaqx. It trades about 0.02 of its potential returns per unit of risk. Fzdaqx is currently generating about 0.13 per unit of risk. If you would invest  24,753  in International Business Machines on May 5, 2025 and sell it today you would earn a total of  252.00  from holding International Business Machines or generate 1.02% return on investment over 90 days.

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

International Business Machine  vs.  Fzdaqx

International Business

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fzdaqx

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fzdaqx are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fzdaqx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Business and Fzdaqx

The main advantage of trading using opposite International Business and Fzdaqx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Fzdaqx 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 Fzdaqx will offset losses from the drop in Fzdaqx's long position.

The idea behind International Business Machines and Fzdaqx 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.