Correlation Between Global Net and Pacific Horizon
Can any of the company-specific risk be diversified away by investing in both Global Net and Pacific Horizon 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 Pacific Horizon 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 Pacific Horizon Investment, you can compare the effects of market volatilities on Global Net and Pacific Horizon 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 Pacific Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Pacific Horizon.
Diversification Opportunities for Global Net and Pacific Horizon
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Pacific is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Pacific Horizon Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Horizon Inve 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 Pacific Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Horizon Inve has no effect on the direction of Global Net i.e., Global Net and Pacific Horizon go up and down completely randomly.
Pair Corralation between Global Net and Pacific Horizon
Assuming the 90 days trading horizon Global Net Lease is expected to generate 2.29 times more return on investment than Pacific Horizon. However, Global Net is 2.29 times more volatile than Pacific Horizon Investment. It trades about 0.48 of its potential returns per unit of risk. Pacific Horizon Investment is currently generating about 0.03 per unit of risk. If you would invest 709.00 in Global Net Lease on December 4, 2024 and sell it today you would earn a total of 113.00 from holding Global Net Lease or generate 15.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global Net Lease vs. Pacific Horizon Investment
Performance |
| Timeline |
| Global Net Lease |
| Pacific Horizon Inve |
Global Net and Pacific Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Pacific Horizon
The main advantage of trading using opposite Global Net and Pacific Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Pacific Horizon 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 Pacific Horizon will offset losses from the drop in Pacific Horizon's long position.| Global Net vs. URU Metals | Global Net vs. Endeavour Mining Corp | Global Net vs. Batm Advanced Communications | Global Net vs. Aeorema Communications Plc |
| Pacific Horizon vs. United Airlines Holdings | Pacific Horizon vs. Gruppo MutuiOnline SpA | Pacific Horizon vs. Southwest Airlines Co | Pacific Horizon vs. International Consolidated Airlines |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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