Correlation Between Global Net and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Global Net and EJF Investments 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 EJF Investments 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 EJF Investments, you can compare the effects of market volatilities on Global Net and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and EJF Investments.
Diversification Opportunities for Global Net and EJF Investments
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and EJF is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Global Net i.e., Global Net and EJF Investments go up and down completely randomly.
Pair Corralation between Global Net and EJF Investments
Assuming the 90 days trading horizon Global Net is expected to generate 756.0 times less return on investment than EJF Investments. In addition to that, Global Net is 1.4 times more volatile than EJF Investments. It trades about 0.0 of its total potential returns per unit of risk. EJF Investments is currently generating about 0.05 per unit of volatility. If you would invest 8,884 in EJF Investments on December 12, 2024 and sell it today you would earn a total of 3,366 from holding EJF Investments or generate 37.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.79% |
| Values | Daily Returns |
Global Net Lease vs. EJF Investments
Performance |
| Timeline |
| Global Net Lease |
| EJF Investments |
Global Net and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and EJF Investments
The main advantage of trading using opposite Global Net and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| Global Net vs. Travel Leisure Co | ||
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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