Correlation Between SP Global and Coinbase Global

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

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

Diversification Opportunities for SP Global and Coinbase Global

-0.55

Correlation Coefficient

SP Global  Coinbase Global

Excellent diversification

The 3 months correlation between SPGI and Coinbase is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and SP Global 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 SP Global are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of SP Global i.e., SP Global and Coinbase Global go up and down completely randomly.

Pair Corralation between SP Global and Coinbase Global

Given the investment horizon of 90 days SP Global is expected to generate 0.24 times more return on investment than Coinbase Global. However, SP Global is 4.21 times less risky than Coinbase Global. It trades about 0.02 of its potential returns per unit of risk. Coinbase Global is currently generating about -0.05 per unit of risk. If you would invest  48,893  in SP Global on July 26, 2024 and sell it today you would earn a total of  428.00  from holding SP Global or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SP Global  vs.  Coinbase Global

SP Global

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SP Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, SP Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Coinbase Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coinbase Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SP Global and Coinbase Global

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

The idea behind SP Global and Coinbase Global 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.