Correlation Between Global Centrated and Global E

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

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

Diversification Opportunities for Global Centrated and Global E

0.99

Correlation Coefficient

Global Centrated  Global E

No risk reduction

The 3 months correlation between Global and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Global Centrated Portfolio and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Global Centrated 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 Centrated Portfolio are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Global Centrated i.e., Global Centrated and Global E go up and down completely randomly.

Pair Corralation between Global Centrated and Global E

Assuming the 90 days horizon Global Centrated Portfolio is expected to generate 1.1 times more return on investment than Global E. However, Global Centrated is 1.1 times more volatile than Global E Portfolio. It trades about 0.22 of its potential returns per unit of risk. Global E Portfolio is currently generating about 0.21 per unit of risk. If you would invest  2,131  in Global Centrated Portfolio on August 12, 2024 and sell it today you would earn a total of  303.00  from holding Global Centrated Portfolio or generate 14.22% return on investment over 90 days.

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

Global Centrated Portfolio  vs.  Global E Portfolio

Global Centrated Por

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Centrated Portfolio are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Centrated showed solid returns over the last few months and may actually be approaching a breakup point.

Global E Portfolio

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Portfolio are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Global E may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Global Centrated and Global E

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

The idea behind Global Centrated Portfolio and Global E Portfolio 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.