Correlation Between Global Payments and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Global Payments and International Consolidated 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 International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Payments and International Consolidated Companies, you can compare the effects of market volatilities on Global Payments and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and International Consolidated.
Diversification Opportunities for Global Payments and International Consolidated
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and International is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Global Payments i.e., Global Payments and International Consolidated go up and down completely randomly.
Pair Corralation between Global Payments and International Consolidated
Considering the 90-day investment horizon Global Payments is expected to generate 0.06 times more return on investment than International Consolidated. However, Global Payments is 17.57 times less risky than International Consolidated. It trades about 0.31 of its potential returns per unit of risk. International Consolidated Companies is currently generating about -0.04 per unit of risk. If you would invest 10,515 in Global Payments on September 3, 2024 and sell it today you would earn a total of 1,381 from holding Global Payments or generate 13.13% 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. International Consolidated Com
Performance |
| Timeline |
| Global Payments |
| International Consolidated |
Global Payments and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Payments and International Consolidated
The main advantage of trading using opposite Global Payments and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
| International Consolidated vs. Cintas | International Consolidated vs. Thomson Reuters Corp | International Consolidated vs. Global Payments | International Consolidated 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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