Correlation Between Global E and Flexible Solutions
Can any of the company-specific risk be diversified away by investing in both Global E and Flexible Solutions 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 E and Flexible Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and Flexible Solutions International, you can compare the effects of market volatilities on Global E and Flexible Solutions 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 E with a short position of Flexible Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Flexible Solutions.
Diversification Opportunities for Global E and Flexible Solutions
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Flexible is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Flexible Solutions Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexible Solutions and Global E 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 E Online are associated (or correlated) with Flexible Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexible Solutions has no effect on the direction of Global E i.e., Global E and Flexible Solutions go up and down completely randomly.
Pair Corralation between Global E and Flexible Solutions
Given the investment horizon of 90 days Global E is expected to generate 1.24 times less return on investment than Flexible Solutions. But when comparing it to its historical volatility, Global E Online is 1.17 times less risky than Flexible Solutions. It trades about 0.04 of its potential returns per unit of risk. Flexible Solutions International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 272.00 in Flexible Solutions International on September 4, 2024 and sell it today you would earn a total of 127.00 from holding Flexible Solutions International or generate 46.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Online vs. Flexible Solutions Internation
Performance |
| Timeline |
| Global E Online |
| Flexible Solutions |
Global E and Flexible Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and Flexible Solutions
The main advantage of trading using opposite Global E and Flexible Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E position performs unexpectedly, Flexible Solutions 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 Flexible Solutions will offset losses from the drop in Flexible Solutions' long position.| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
| Flexible Solutions vs. Innospec | Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Quaker Chemical |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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