Correlation Between Global Business and Vertex
Can any of the company-specific risk be diversified away by investing in both Global Business and Vertex 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 Vertex 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 Vertex, you can compare the effects of market volatilities on Global Business and Vertex 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 Vertex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Business and Vertex.
Diversification Opportunities for Global Business and Vertex
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Vertex is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and Vertex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex 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 Vertex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex has no effect on the direction of Global Business i.e., Global Business and Vertex go up and down completely randomly.
Pair Corralation between Global Business and Vertex
Given the investment horizon of 90 days Global Business Travel is expected to under-perform the Vertex. But the stock apears to be less risky and, when comparing its historical volatility, Global Business Travel is 1.16 times less risky than Vertex. The stock trades about -0.15 of its potential returns per unit of risk. The Vertex is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,320 in Vertex on October 24, 2024 and sell it today you would earn a total of 340.00 from holding Vertex or generate 6.39% 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. Vertex
Performance |
| Timeline |
| Global Business Travel |
| Vertex |
Global Business and Vertex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Business and Vertex
The main advantage of trading using opposite Global Business and Vertex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Business position performs unexpectedly, Vertex 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 Vertex will offset losses from the drop in Vertex's long position.| Global Business vs. Meridianlink | Global Business vs. Alkami Technology | Global Business vs. Blackbaud | Global Business vs. Enfusion |
| Vertex vs. Expensify | Vertex vs. Clearwater Analytics Holdings | Vertex vs. Sprinklr | Vertex vs. Alkami Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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