Correlation Between Reworld Media and Glob Bioenergi
Can any of the company-specific risk be diversified away by investing in both Reworld Media and Glob Bioenergi 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 Reworld Media and Glob Bioenergi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reworld Media and Glob Bioenergi, you can compare the effects of market volatilities on Reworld Media and Glob Bioenergi 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 Reworld Media with a short position of Glob Bioenergi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reworld Media and Glob Bioenergi.
Diversification Opportunities for Reworld Media and Glob Bioenergi
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reworld and Glob is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Reworld Media and Glob Bioenergi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glob Bioenergi and Reworld Media 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 Reworld Media are associated (or correlated) with Glob Bioenergi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glob Bioenergi has no effect on the direction of Reworld Media i.e., Reworld Media and Glob Bioenergi go up and down completely randomly.
Pair Corralation between Reworld Media and Glob Bioenergi
Assuming the 90 days trading horizon Reworld Media is expected to under-perform the Glob Bioenergi. But the stock apears to be less risky and, when comparing its historical volatility, Reworld Media is 2.05 times less risky than Glob Bioenergi. The stock trades about -0.07 of its potential returns per unit of risk. The Glob Bioenergi is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Glob Bioenergi on September 4, 2024 and sell it today you would lose (132.00) from holding Glob Bioenergi or give up 60.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reworld Media vs. Glob Bioenergi
Performance |
| Timeline |
| Reworld Media |
| Glob Bioenergi |
Reworld Media and Glob Bioenergi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reworld Media and Glob Bioenergi
The main advantage of trading using opposite Reworld Media and Glob Bioenergi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reworld Media position performs unexpectedly, Glob Bioenergi 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 Glob Bioenergi will offset losses from the drop in Glob Bioenergi's long position.| Reworld Media vs. Spineguard | Reworld Media vs. Vallourec | Reworld Media vs. Manitou BF SA | Reworld Media vs. Ossiam Minimum Variance |
| Glob Bioenergi vs. SA Catana Group | Glob Bioenergi vs. Piscines Desjoyaux SA | Glob Bioenergi vs. Reworld Media | Glob Bioenergi vs. Manitou BF SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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