Correlation Between Inter Cars and Globe Trade
Can any of the company-specific risk be diversified away by investing in both Inter Cars and Globe Trade 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 Inter Cars and Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Cars SA and Globe Trade Centre, you can compare the effects of market volatilities on Inter Cars and Globe Trade 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 Inter Cars with a short position of Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Cars and Globe Trade.
Diversification Opportunities for Inter Cars and Globe Trade
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inter and Globe is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars SA and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre and Inter Cars 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 Inter Cars SA are associated (or correlated) with Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Inter Cars i.e., Inter Cars and Globe Trade go up and down completely randomly.
Pair Corralation between Inter Cars and Globe Trade
Assuming the 90 days trading horizon Inter Cars SA is expected to generate 0.68 times more return on investment than Globe Trade. However, Inter Cars SA is 1.47 times less risky than Globe Trade. It trades about 0.0 of its potential returns per unit of risk. Globe Trade Centre is currently generating about -0.02 per unit of risk. If you would invest 52,657 in Inter Cars SA on September 2, 2024 and sell it today you would lose (3,307) from holding Inter Cars SA or give up 6.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Cars SA vs. Globe Trade Centre
Performance |
| Timeline |
| Inter Cars SA |
| Globe Trade Centre |
Inter Cars and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Cars and Globe Trade
The main advantage of trading using opposite Inter Cars and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Cars position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.| Inter Cars vs. Banco Santander SA | Inter Cars vs. UniCredit SpA | Inter Cars vs. CEZ as | Inter Cars vs. Polski Koncern Naftowy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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