Correlation Between VIRG NATL and Global Payments
Can any of the company-specific risk be diversified away by investing in both VIRG NATL and Global Payments 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 VIRG NATL and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIRG NATL BANKSH and Global Payments, you can compare the effects of market volatilities on VIRG NATL and Global Payments 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 VIRG NATL with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRG NATL and Global Payments.
Diversification Opportunities for VIRG NATL and Global Payments
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VIRG and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and VIRG NATL 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 VIRG NATL BANKSH are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of VIRG NATL i.e., VIRG NATL and Global Payments go up and down completely randomly.
Pair Corralation between VIRG NATL and Global Payments
Assuming the 90 days horizon VIRG NATL BANKSH is expected to under-perform the Global Payments. In addition to that, VIRG NATL is 2.92 times more volatile than Global Payments. It trades about -0.01 of its total potential returns per unit of risk. Global Payments is currently generating about 0.09 per unit of volatility. If you would invest 10,700 in Global Payments on September 12, 2024 and sell it today you would earn a total of 280.00 from holding Global Payments or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
VIRG NATL BANKSH vs. Global Payments
Performance |
| Timeline |
| VIRG NATL BANKSH |
| Global Payments |
VIRG NATL and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIRG NATL and Global Payments
The main advantage of trading using opposite VIRG NATL and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRG NATL position performs unexpectedly, Global Payments 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 Global Payments will offset losses from the drop in Global Payments' long position.The idea behind VIRG NATL BANKSH and Global Payments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Payments vs. Automatic Data Processing | Global Payments vs. Paychex | Global Payments vs. Superior Plus Corp | Global Payments vs. SIVERS SEMICONDUCTORS AB |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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