Correlation Between Equifax and Global Payments
Can any of the company-specific risk be diversified away by investing in both Equifax 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 Equifax and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equifax and Global Payments, you can compare the effects of market volatilities on Equifax 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 Equifax with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equifax and Global Payments.
Diversification Opportunities for Equifax and Global Payments
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equifax and Global is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Equifax 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 Equifax 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 Equifax i.e., Equifax and Global Payments go up and down completely randomly.
Pair Corralation between Equifax and Global Payments
Assuming the 90 days horizon Equifax is expected to generate 1.33 times less return on investment than Global Payments. But when comparing it to its historical volatility, Equifax is 1.43 times less risky than Global Payments. It trades about 0.08 of its potential returns per unit of risk. Global Payments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,258 in Global Payments on September 1, 2024 and sell it today you would earn a total of 2,032 from holding Global Payments or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equifax vs. Global Payments
Performance |
| Timeline |
| Equifax |
| Global Payments |
Equifax and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equifax and Global Payments
The main advantage of trading using opposite Equifax and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax 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.| Equifax vs. HOCHSCHILD MINING | Equifax vs. HANOVER INSURANCE | Equifax vs. Zurich Insurance Group | Equifax vs. TSOGO SUN GAMING |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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