Correlation Between Aramark Holdings and Global Payments
Can any of the company-specific risk be diversified away by investing in both Aramark Holdings 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 Aramark Holdings and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aramark Holdings and Global Payments, you can compare the effects of market volatilities on Aramark Holdings 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 Aramark Holdings with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aramark Holdings and Global Payments.
Diversification Opportunities for Aramark Holdings and Global Payments
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aramark and Global is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Aramark Holdings 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 Aramark Holdings 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 Aramark Holdings i.e., Aramark Holdings and Global Payments go up and down completely randomly.
Pair Corralation between Aramark Holdings and Global Payments
Given the investment horizon of 90 days Aramark Holdings is expected to generate 1.44 times less return on investment than Global Payments. But when comparing it to its historical volatility, Aramark Holdings is 1.27 times less risky than Global Payments. It trades about 0.27 of its potential returns per unit of risk. Global Payments is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 10,176 in Global Payments on August 28, 2024 and sell it today you would earn a total of 1,570 from holding Global Payments or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aramark Holdings vs. Global Payments
Performance |
| Timeline |
| Aramark Holdings |
| Global Payments |
Aramark Holdings and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aramark Holdings and Global Payments
The main advantage of trading using opposite Aramark Holdings and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aramark Holdings 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.| Aramark Holdings vs. Civeo Corp | Aramark Holdings vs. ABM Industries Incorporated | Aramark Holdings vs. ADM Endeavors | Aramark Holdings vs. Maximus |
| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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