Correlation Between Globalfoundries and Red Branch
Can any of the company-specific risk be diversified away by investing in both Globalfoundries and Red Branch 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 Globalfoundries and Red Branch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and Red Branch Technologies, you can compare the effects of market volatilities on Globalfoundries and Red Branch 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 Globalfoundries with a short position of Red Branch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Red Branch.
Diversification Opportunities for Globalfoundries and Red Branch
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Globalfoundries and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Red Branch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Branch Technologies and Globalfoundries 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 Globalfoundries are associated (or correlated) with Red Branch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Branch Technologies has no effect on the direction of Globalfoundries i.e., Globalfoundries and Red Branch go up and down completely randomly.
Pair Corralation between Globalfoundries and Red Branch
Considering the 90-day investment horizon Globalfoundries is expected to generate 1.07 times more return on investment than Red Branch. However, Globalfoundries is 1.07 times more volatile than Red Branch Technologies. It trades about -0.03 of its potential returns per unit of risk. Red Branch Technologies is currently generating about -0.06 per unit of risk. If you would invest 5,852 in Globalfoundries on September 12, 2024 and sell it today you would lose (1,467) from holding Globalfoundries or give up 25.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. Red Branch Technologies
Performance |
| Timeline |
| Globalfoundries |
| Red Branch Technologies |
Globalfoundries and Red Branch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and Red Branch
The main advantage of trading using opposite Globalfoundries and Red Branch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, Red Branch 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 Red Branch will offset losses from the drop in Red Branch's long position.| Globalfoundries vs. NVIDIA | Globalfoundries vs. Taiwan Semiconductor Manufacturing | Globalfoundries vs. Micron Technology | Globalfoundries vs. Qualcomm Incorporated |
| Red Branch vs. Deere Company | Red Branch vs. Caterpillar | Red Branch vs. Lion Electric Corp | Red Branch vs. Nikola Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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