Correlation Between Global Payments and VIRG NATL
Can any of the company-specific risk be diversified away by investing in both Global Payments and VIRG NATL 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 Payments and VIRG NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Payments and VIRG NATL BANKSH, you can compare the effects of market volatilities on Global Payments and VIRG NATL 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 Payments with a short position of VIRG NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and VIRG NATL.
Diversification Opportunities for Global Payments and VIRG NATL
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and VIRG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH and Global Payments 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 Payments are associated (or correlated) with VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of Global Payments i.e., Global Payments and VIRG NATL go up and down completely randomly.
Pair Corralation between Global Payments and VIRG NATL
Assuming the 90 days horizon Global Payments is expected to generate 0.34 times more return on investment than VIRG NATL. However, Global Payments is 2.92 times less risky than VIRG NATL. It trades about 0.09 of its potential returns per unit of risk. VIRG NATL BANKSH is currently generating about -0.01 per unit of risk. If you would invest 10,700 in Global Payments on September 12, 2024 and sell it today you would earn a total of 280.00 from holding Global Payments or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global Payments vs. VIRG NATL BANKSH
Performance |
| Timeline |
| Global Payments |
| VIRG NATL BANKSH |
Global Payments and VIRG NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Payments and VIRG NATL
The main advantage of trading using opposite Global Payments and VIRG NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments position performs unexpectedly, VIRG NATL 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 VIRG NATL will offset losses from the drop in VIRG NATL's long position.| Global Payments vs. Automatic Data Processing | Global Payments vs. Paychex | Global Payments vs. Superior Plus Corp | Global Payments vs. SIVERS SEMICONDUCTORS AB |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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