Correlation Between Globe Trade and ELECTROLUX
Can any of the company-specific risk be diversified away by investing in both Globe Trade and ELECTROLUX 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 Globe Trade and ELECTROLUX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Trade Centre and ELECTROLUX B ADR2, you can compare the effects of market volatilities on Globe Trade and ELECTROLUX 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 Globe Trade with a short position of ELECTROLUX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and ELECTROLUX.
Diversification Opportunities for Globe Trade and ELECTROLUX
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Globe and ELECTROLUX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and ELECTROLUX B ADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTROLUX B ADR2 and Globe Trade 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 Globe Trade Centre are associated (or correlated) with ELECTROLUX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTROLUX B ADR2 has no effect on the direction of Globe Trade i.e., Globe Trade and ELECTROLUX go up and down completely randomly.
Pair Corralation between Globe Trade and ELECTROLUX
Assuming the 90 days trading horizon Globe Trade Centre is expected to generate 0.55 times more return on investment than ELECTROLUX. However, Globe Trade Centre is 1.83 times less risky than ELECTROLUX. It trades about 0.03 of its potential returns per unit of risk. ELECTROLUX B ADR2 is currently generating about -0.03 per unit of risk. If you would invest 83.00 in Globe Trade Centre on September 5, 2024 and sell it today you would earn a total of 18.00 from holding Globe Trade Centre or generate 21.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Trade Centre vs. ELECTROLUX B ADR2
Performance |
| Timeline |
| Globe Trade Centre |
| ELECTROLUX B ADR2 |
Globe Trade and ELECTROLUX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and ELECTROLUX
The main advantage of trading using opposite Globe Trade and ELECTROLUX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade position performs unexpectedly, ELECTROLUX 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 ELECTROLUX will offset losses from the drop in ELECTROLUX's long position.| Globe Trade vs. TOTAL GABON | Globe Trade vs. Walgreens Boots Alliance | Globe Trade vs. Peak Resources Limited |
| ELECTROLUX vs. LG Display Co | ELECTROLUX vs. Globe Trade Centre | ELECTROLUX vs. TRADEDOUBLER AB SK | ELECTROLUX vs. Ribbon Communications |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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