Correlation Between Global Payments and Thomson Reuters
Can any of the company-specific risk be diversified away by investing in both Global Payments and Thomson Reuters 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 Thomson Reuters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Payments and Thomson Reuters Corp, you can compare the effects of market volatilities on Global Payments and Thomson Reuters 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 Thomson Reuters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and Thomson Reuters.
Diversification Opportunities for Global Payments and Thomson Reuters
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Thomson is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Thomson Reuters Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters Corp 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 Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters Corp has no effect on the direction of Global Payments i.e., Global Payments and Thomson Reuters go up and down completely randomly.
Pair Corralation between Global Payments and Thomson Reuters
Considering the 90-day investment horizon Global Payments is expected to generate 1.66 times more return on investment than Thomson Reuters. However, Global Payments is 1.66 times more volatile than Thomson Reuters Corp. It trades about 0.34 of its potential returns per unit of risk. Thomson Reuters Corp is currently generating about -0.1 per unit of risk. If you would invest 9,953 in Global Payments on August 25, 2024 and sell it today you would earn a total of 1,752 from holding Global Payments or generate 17.6% 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. Thomson Reuters Corp
Performance |
| Timeline |
| Global Payments |
| Thomson Reuters Corp |
Global Payments and Thomson Reuters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Payments and Thomson Reuters
The main advantage of trading using opposite Global Payments and Thomson Reuters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments position performs unexpectedly, Thomson Reuters 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 Thomson Reuters will offset losses from the drop in Thomson Reuters' long position.| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
| Thomson Reuters vs. Rentokil Initial PLC | Thomson Reuters vs. Performant Financial | Thomson Reuters vs. Cass Information Systems | Thomson Reuters vs. Maximus |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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