Correlation Between Global Business and Affirm Holdings
Can any of the company-specific risk be diversified away by investing in both Global Business and Affirm Holdings 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 Global Business and Affirm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Business Travel and Affirm Holdings, you can compare the effects of market volatilities on Global Business and Affirm Holdings 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 Global Business with a short position of Affirm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Business and Affirm Holdings.
Diversification Opportunities for Global Business and Affirm Holdings
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Affirm is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Global Business 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 Global Business Travel are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Global Business i.e., Global Business and Affirm Holdings go up and down completely randomly.
Pair Corralation between Global Business and Affirm Holdings
Given the investment horizon of 90 days Global Business is expected to generate 2.76 times less return on investment than Affirm Holdings. But when comparing it to its historical volatility, Global Business Travel is 2.19 times less risky than Affirm Holdings. It trades about 0.26 of its potential returns per unit of risk. Affirm Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,287 in Affirm Holdings on August 30, 2024 and sell it today you would earn a total of 2,340 from holding Affirm Holdings or generate 54.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Business Travel vs. Affirm Holdings
Performance |
| Timeline |
| Global Business Travel |
| Affirm Holdings |
Global Business and Affirm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Business and Affirm Holdings
The main advantage of trading using opposite Global Business and Affirm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Business position performs unexpectedly, Affirm Holdings 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 Affirm Holdings will offset losses from the drop in Affirm Holdings' long position.| Global Business vs. Envestnet | Global Business vs. Meridianlink | Global Business vs. Alkami Technology | Global Business vs. Blackbaud |
| Affirm Holdings vs. Oneconnect Financial Technology | Affirm Holdings vs. Global Business Travel | Affirm Holdings vs. Alight Inc | Affirm Holdings vs. CS Disco LLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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