Correlation Between Riskified and Global Business

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

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

Diversification Opportunities for Riskified and Global Business

-0.78

Correlation Coefficient

Riskified  Global Business

Pay attention - limited upside

The 3 months correlation between Riskified and Global is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Riskified and Global Business Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Business Travel and Riskified 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 Riskified are associated (or correlated) with Global Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Business Travel has no effect on the direction of Riskified i.e., Riskified and Global Business go up and down completely randomly.

Pair Corralation between Riskified and Global Business

Given the investment horizon of 90 days Riskified is expected to generate 1.04 times less return on investment than Global Business. In addition to that, Riskified is 1.15 times more volatile than Global Business Travel. It trades about 0.03 of its total potential returns per unit of risk. Global Business Travel is currently generating about 0.03 per unit of volatility. If you would invest  566.00  in Global Business Travel on June 21, 2024 and sell it today you would earn a total of  185.00  from holding Global Business Travel or generate 32.69% return on investment over 90 days.

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

Riskified  vs.  Global Business Travel

Riskified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Business Travel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Business Travel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Global Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Riskified and Global Business

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

The idea behind Riskified and Global Business Travel 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.