Correlation Between International Business and Univec

Can any of the company-specific risk be diversified away by investing in both International Business and Univec 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 Univec 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 Univec Inc, you can compare the effects of market volatilities on International Business and Univec 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 Univec. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Univec.

Diversification Opportunities for International Business and Univec

-0.23

Correlation Coefficient

International Business  Univec

Very good diversification

The 3 months correlation between International and Univec is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Univec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univec Inc 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 Univec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univec Inc has no effect on the direction of International Business i.e., International Business and Univec go up and down completely randomly.

Pair Corralation between International Business and Univec

Considering the 90-day investment horizon International Business is expected to generate 735.0 times less return on investment than Univec. But when comparing it to its historical volatility, International Business Machines is 6.27 times less risky than Univec. It trades about 0.0 of its potential returns per unit of risk. Univec Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.25  in Univec Inc on May 8, 2025 and sell it today you would earn a total of  0.00  from holding Univec Inc or generate 0.0% return on investment over 90 days.

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

International Business Machine  vs.  Univec Inc

International Business

Risk-Adjusted Performance

Weakest

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 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.

Univec Inc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Univec Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Univec exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Business and Univec

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

The idea behind International Business Machines and Univec Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.