Correlation Between Global Net and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Global Net and Solstad Offshore 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 Net and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Solstad Offshore ASA, you can compare the effects of market volatilities on Global Net and Solstad Offshore 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 Net with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Solstad Offshore.
Diversification Opportunities for Global Net and Solstad Offshore
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Solstad is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and Global Net 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 Net Lease are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Global Net i.e., Global Net and Solstad Offshore go up and down completely randomly.
Pair Corralation between Global Net and Solstad Offshore
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 4.02 times less risky than Solstad Offshore. The stock trades about -0.13 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,254 in Solstad Offshore ASA on September 13, 2024 and sell it today you would earn a total of 598.00 from holding Solstad Offshore ASA or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Solstad Offshore ASA
Performance |
| Timeline |
| Global Net Lease |
| Solstad Offshore ASA |
Global Net and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Solstad Offshore
The main advantage of trading using opposite Global Net and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Global Net vs. Samsung Electronics Co | Global Net vs. Samsung Electronics Co | Global Net vs. Hyundai Motor | Global Net vs. Reliance Industries Ltd |
| Solstad Offshore vs. Samsung Electronics Co | Solstad Offshore vs. Samsung Electronics Co | Solstad Offshore vs. Hyundai Motor | Solstad Offshore vs. Reliance Industries Ltd |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |