Correlation Between O I and International Paper
Can any of the company-specific risk be diversified away by investing in both O I and International Paper 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 O I and International Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between O I Glass and International Paper, you can compare the effects of market volatilities on O I and International Paper 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 O I with a short position of International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of O I and International Paper.
Diversification Opportunities for O I and International Paper
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between O I and International is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding O I Glass and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper and O I 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 O I Glass are associated (or correlated) with International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of O I i.e., O I and International Paper go up and down completely randomly.
Pair Corralation between O I and International Paper
Allowing for the 90-day total investment horizon O I Glass is expected to under-perform the International Paper. In addition to that, O I is 1.25 times more volatile than International Paper. It trades about -0.12 of its total potential returns per unit of risk. International Paper is currently generating about 0.1 per unit of volatility. If you would invest 4,806 in International Paper on September 23, 2024 and sell it today you would earn a total of 639.00 from holding International Paper or generate 13.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
O I Glass vs. International Paper
Performance |
Timeline |
O I Glass |
International Paper |
O I and International Paper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with O I and International Paper
The main advantage of trading using opposite O I and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O I position performs unexpectedly, International Paper 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 Paper will offset losses from the drop in International Paper's long position.O I vs. Avery Dennison Corp | O I vs. Packaging Corp of | O I vs. Sealed Air | O I vs. Graphic Packaging Holding |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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