Correlation Between Global Star and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both Global Star and ECB Bancorp 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 Star and ECB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Star Acquisition and ECB Bancorp, you can compare the effects of market volatilities on Global Star and ECB Bancorp 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 Star with a short position of ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Star and ECB Bancorp.
Diversification Opportunities for Global Star and ECB Bancorp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and ECB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global Star Acquisition and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB Bancorp and Global Star 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 Star Acquisition are associated (or correlated) with ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of Global Star i.e., Global Star and ECB Bancorp go up and down completely randomly.
Pair Corralation between Global Star and ECB Bancorp
Assuming the 90 days horizon Global Star Acquisition is expected to generate 0.15 times more return on investment than ECB Bancorp. However, Global Star Acquisition is 6.89 times less risky than ECB Bancorp. It trades about 0.3 of its potential returns per unit of risk. ECB Bancorp is currently generating about -0.06 per unit of risk. If you would invest 1,136 in Global Star Acquisition on August 27, 2024 and sell it today you would earn a total of 12.00 from holding Global Star Acquisition or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Star Acquisition vs. ECB Bancorp
Performance |
| Timeline |
| Global Star Acquisition |
| ECB Bancorp |
Global Star and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Star and ECB Bancorp
The main advantage of trading using opposite Global Star and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Star position performs unexpectedly, ECB Bancorp 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| Global Star vs. Codexis | Global Star vs. Axalta Coating Systems | Global Star vs. Luxfer Holdings PLC | Global Star vs. NETGEAR |
| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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