Correlation Between Global Net and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Global Net and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Global Net and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Spotify Technology.
Diversification Opportunities for Global Net and Spotify Technology
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Global and Spotify is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Global Net i.e., Global Net and Spotify Technology go up and down completely randomly.
Pair Corralation between Global Net and Spotify Technology
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Spotify Technology. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 1.48 times less risky than Spotify Technology. The stock trades about -0.17 of its potential returns per unit of risk. The Spotify Technology SA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 30,965 in Spotify Technology SA on September 12, 2024 and sell it today you would earn a total of 14,250 from holding Spotify Technology SA or generate 46.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Spotify Technology SA
Performance |
| Timeline |
| Global Net Lease |
| Spotify Technology |
Global Net and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Spotify Technology
The main advantage of trading using opposite Global Net and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology'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 |
| Spotify Technology vs. Aeorema Communications Plc | Spotify Technology vs. Fonix Mobile plc | Spotify Technology vs. mobilezone holding AG | Spotify Technology vs. Gamma Communications PLC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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