Correlation Between Coty and Global E
Can any of the company-specific risk be diversified away by investing in both Coty and Global E 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 Coty and Global E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and Global E Online, you can compare the effects of market volatilities on Coty and Global E 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 Coty with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Global E.
Diversification Opportunities for Coty and Global E
Excellent diversification
The 3 months correlation between Coty and Global is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and Coty 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 Coty Inc are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Coty i.e., Coty and Global E go up and down completely randomly.
Pair Corralation between Coty and Global E
Given the investment horizon of 90 days Coty Inc is expected to under-perform the Global E. But the stock apears to be less risky and, when comparing its historical volatility, Coty Inc is 1.57 times less risky than Global E. The stock trades about -0.05 of its potential returns per unit of risk. The Global E Online is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,995 in Global E Online on August 29, 2024 and sell it today you would earn a total of 1,191 from holding Global E Online or generate 29.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coty Inc vs. Global E Online
Performance |
| Timeline |
| Coty Inc |
| Global E Online |
Coty and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and Global E
The main advantage of trading using opposite Coty and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, Global E 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 E will offset losses from the drop in Global E's long position.The idea behind Coty Inc and Global E Online 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 E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
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.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |