Correlation Between Global Payments and Wilhelmina
Can any of the company-specific risk be diversified away by investing in both Global Payments and Wilhelmina 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 Wilhelmina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Payments and Wilhelmina, you can compare the effects of market volatilities on Global Payments and Wilhelmina 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 Wilhelmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and Wilhelmina.
Diversification Opportunities for Global Payments and Wilhelmina
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Wilhelmina is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina 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 Wilhelmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilhelmina has no effect on the direction of Global Payments i.e., Global Payments and Wilhelmina go up and down completely randomly.
Pair Corralation between Global Payments and Wilhelmina
Considering the 90-day investment horizon Global Payments is expected to generate 1.49 times less return on investment than Wilhelmina. But when comparing it to its historical volatility, Global Payments is 1.44 times less risky than Wilhelmina. It trades about 0.31 of its potential returns per unit of risk. Wilhelmina is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 331.00 in Wilhelmina on September 3, 2024 and sell it today you would earn a total of 66.00 from holding Wilhelmina or generate 19.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Payments vs. Wilhelmina
Performance |
| Timeline |
| Global Payments |
| Wilhelmina |
Global Payments and Wilhelmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Payments and Wilhelmina
The main advantage of trading using opposite Global Payments and Wilhelmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments position performs unexpectedly, Wilhelmina 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 Wilhelmina will offset losses from the drop in Wilhelmina'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 |
| Wilhelmina vs. Performant Financial | Wilhelmina vs. Network 1 Technologies | Wilhelmina vs. Rentokil Initial PLC | Wilhelmina vs. Mader Group Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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