Correlation Between Global Net and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Global Net and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Global Net and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Scandic Hotels.
Diversification Opportunities for Global Net and Scandic Hotels
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Scandic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Global Net i.e., Global Net and Scandic Hotels go up and down completely randomly.
Pair Corralation between Global Net and Scandic Hotels
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Scandic Hotels. In addition to that, Global Net is 1.59 times more volatile than Scandic Hotels Group. It trades about -0.02 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.17 per unit of volatility. If you would invest 5,863 in Scandic Hotels Group on November 4, 2024 and sell it today you would earn a total of 1,865 from holding Scandic Hotels Group or generate 31.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Global Net Lease vs. Scandic Hotels Group
Performance |
| Timeline |
| Global Net Lease |
| Scandic Hotels Group |
Global Net and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Scandic Hotels
The main advantage of trading using opposite Global Net and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Global Net vs. Samsung Electronics Co | Global Net vs. Samsung Electronics Co | Global Net vs. Toyota Motor Corp | Global Net vs. Reliance Industries Ltd |
| Scandic Hotels vs. Zegona Communications Plc | Scandic Hotels vs. Take Two Interactive Software | Scandic Hotels vs. Sunny Optical Technology | Scandic Hotels vs. Zoom Video Communications |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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