Correlation Between Superior Plus and Global Payments
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Global Payments, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Global Payments.
Diversification Opportunities for Superior Plus and Global Payments
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Global is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Global Payments go up and down completely randomly.
Pair Corralation between Superior Plus and Global Payments
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Global Payments. In addition to that, Superior Plus is 1.6 times more volatile than Global Payments. It trades about -0.08 of its total potential returns per unit of risk. Global Payments is currently generating about 0.21 per unit of volatility. If you would invest 9,022 in Global Payments on August 30, 2024 and sell it today you would earn a total of 2,108 from holding Global Payments or generate 23.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Global Payments
Performance |
| Timeline |
| Superior Plus Corp |
| Global Payments |
Superior Plus and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Global Payments
The main advantage of trading using opposite Superior Plus and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Meli Hotels International | Superior Plus vs. InterContinental Hotels Group | Superior Plus vs. PT Bank Maybank | Superior Plus vs. Pebblebrook Hotel Trust |
| Global Payments vs. Superior Plus Corp | Global Payments vs. SIVERS SEMICONDUCTORS AB | Global Payments vs. Talanx AG | Global Payments vs. 2G ENERGY |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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