Correlation Between Global Payments and Brambles
Can any of the company-specific risk be diversified away by investing in both Global Payments and Brambles 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 Brambles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Payments and Brambles Ltd ADR, you can compare the effects of market volatilities on Global Payments and Brambles 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 Brambles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and Brambles.
Diversification Opportunities for Global Payments and Brambles
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Brambles is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Brambles Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles ADR 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 Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles ADR has no effect on the direction of Global Payments i.e., Global Payments and Brambles go up and down completely randomly.
Pair Corralation between Global Payments and Brambles
Considering the 90-day investment horizon Global Payments is expected to generate 1.35 times more return on investment than Brambles. However, Global Payments is 1.35 times more volatile than Brambles Ltd ADR. It trades about 0.33 of its potential returns per unit of risk. Brambles Ltd ADR is currently generating about 0.09 per unit of risk. If you would invest 10,333 in Global Payments on August 31, 2024 and sell it today you would earn a total of 1,563 from holding Global Payments or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Payments vs. Brambles Ltd ADR
Performance |
| Timeline |
| Global Payments |
| Brambles ADR |
Global Payments and Brambles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Payments and Brambles
The main advantage of trading using opposite Global Payments and Brambles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments position performs unexpectedly, Brambles 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 Brambles will offset losses from the drop in Brambles' long position.| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
| Brambles vs. Cintas | Brambles vs. Thomson Reuters Corp | Brambles vs. Global Payments | Brambles vs. RB Global |
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 Stocks Directory module to find actively traded stocks across global markets.
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