Correlation Between Global Payments and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Global Payments and CarsalesCom 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 CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Payments and CarsalesCom, you can compare the effects of market volatilities on Global Payments and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and CarsalesCom.
Diversification Opportunities for Global Payments and CarsalesCom
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and CarsalesCom is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Global Payments i.e., Global Payments and CarsalesCom go up and down completely randomly.
Pair Corralation between Global Payments and CarsalesCom
Assuming the 90 days horizon Global Payments is expected to generate 2.44 times less return on investment than CarsalesCom. In addition to that, Global Payments is 1.32 times more volatile than CarsalesCom. It trades about 0.03 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of volatility. If you would invest 1,273 in CarsalesCom on August 30, 2024 and sell it today you would earn a total of 1,227 from holding CarsalesCom or generate 96.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Payments vs. CarsalesCom
Performance |
| Timeline |
| Global Payments |
| CarsalesCom |
Global Payments and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Payments and CarsalesCom
The main advantage of trading using opposite Global Payments and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| Global Payments vs. Superior Plus Corp | Global Payments vs. SIVERS SEMICONDUCTORS AB | Global Payments vs. Talanx AG | Global Payments vs. 2G ENERGY |
| CarsalesCom vs. AM EAGLE OUTFITTERS | CarsalesCom vs. RYU Apparel | CarsalesCom vs. Cal Maine Foods | CarsalesCom vs. SCIENCE IN SPORT |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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