Correlation Between G5 Entertainment and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Spirent Communications 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 G5 Entertainment and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment AB and Spirent Communications plc, you can compare the effects of market volatilities on G5 Entertainment and Spirent Communications 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 G5 Entertainment with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Spirent Communications.
Diversification Opportunities for G5 Entertainment and Spirent Communications
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0QUS and Spirent is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and G5 Entertainment 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 G5 Entertainment AB are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Spirent Communications go up and down completely randomly.
Pair Corralation between G5 Entertainment and Spirent Communications
Assuming the 90 days trading horizon G5 Entertainment AB is expected to generate 2.25 times more return on investment than Spirent Communications. However, G5 Entertainment is 2.25 times more volatile than Spirent Communications plc. It trades about 0.34 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.12 per unit of risk. If you would invest 10,940 in G5 Entertainment AB on October 31, 2024 and sell it today you would earn a total of 1,760 from holding G5 Entertainment AB or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G5 Entertainment AB vs. Spirent Communications plc
Performance |
| Timeline |
| G5 Entertainment |
| Spirent Communications |
G5 Entertainment and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Spirent Communications
The main advantage of trading using opposite G5 Entertainment and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| G5 Entertainment vs. Sovereign Metals | G5 Entertainment vs. Veolia Environnement VE | G5 Entertainment vs. Fulcrum Metals PLC | G5 Entertainment vs. Air Products Chemicals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stocks Directory Find actively traded stocks across global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |