Correlation Between Global Net and Trellus Health
Can any of the company-specific risk be diversified away by investing in both Global Net and Trellus Health 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 Trellus Health 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 Trellus Health plc, you can compare the effects of market volatilities on Global Net and Trellus Health 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 Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Trellus Health.
Diversification Opportunities for Global Net and Trellus Health
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Trellus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health plc 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Global Net i.e., Global Net and Trellus Health go up and down completely randomly.
Pair Corralation between Global Net and Trellus Health
Assuming the 90 days trading horizon Global Net is expected to generate 146.93 times less return on investment than Trellus Health. But when comparing it to its historical volatility, Global Net Lease is 71.37 times less risky than Trellus Health. It trades about 0.1 of its potential returns per unit of risk. Trellus Health plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Trellus Health plc on October 25, 2024 and sell it today you would earn a total of 178.00 from holding Trellus Health plc or generate 312.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Global Net Lease vs. Trellus Health plc
Performance |
| Timeline |
| Global Net Lease |
| Trellus Health plc |
Global Net and Trellus Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Trellus Health
The main advantage of trading using opposite Global Net and Trellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Trellus Health 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 Trellus Health will offset losses from the drop in Trellus Health's long position.| Global Net vs. Medical Properties Trust | Global Net vs. Catena Media PLC | Global Net vs. XLMedia PLC | Global Net vs. Hollywood Bowl Group |
| Trellus Health vs. SupplyMe Capital PLC | Trellus Health vs. SM Energy Co | Trellus Health vs. FuelCell Energy | Trellus Health vs. Grand Vision Media |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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