Correlation Between Global E and Guess

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

By analyzing existing cross correlation between Global E Online and Guess Inc, you can compare the effects of market volatilities on Global E and Guess 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 Global E with a short position of Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Guess.

Diversification Opportunities for Global E and Guess

-0.41

Correlation Coefficient

Global E  Guess

Very good diversification

The 3 months correlation between Global and Guess is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Global E 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 Global E Online are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Global E i.e., Global E and Guess go up and down completely randomly.

Pair Corralation between Global E and Guess

Given the investment horizon of 90 days Global E Online is expected to under-perform the Guess. In addition to that, Global E is 1.48 times more volatile than Guess Inc. It trades about -0.1 of its total potential returns per unit of risk. Guess Inc is currently generating about -0.12 per unit of volatility. If you would invest  2,811  in Guess Inc on February 4, 2024 and sell it today you would lose (140.00) from holding Guess Inc or give up 4.98% of portfolio value over 90 days.

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

Global E Online  vs.  Guess Inc

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Guess Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guess Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Guess unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global E and Guess

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

The idea behind Global E Online and Guess 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.