Correlation Between Herald Investment and Global Net
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Global Net 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 Herald Investment and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Global Net Lease, you can compare the effects of market volatilities on Herald Investment and Global Net 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 Herald Investment with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Global Net.
Diversification Opportunities for Herald Investment and Global Net
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Herald and Global is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Herald Investment i.e., Herald Investment and Global Net go up and down completely randomly.
Pair Corralation between Herald Investment and Global Net
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.76 times more return on investment than Global Net. However, Herald Investment Trust is 1.31 times less risky than Global Net. It trades about 0.49 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.02 per unit of risk. If you would invest 208,000 in Herald Investment Trust on September 2, 2024 and sell it today you would earn a total of 27,500 from holding Herald Investment Trust or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Global Net Lease
Performance |
| Timeline |
| Herald Investment Trust |
| Global Net Lease |
Herald Investment and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Global Net
The main advantage of trading using opposite Herald Investment and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Herald Investment vs. Zoom Video Communications | Herald Investment vs. Home Depot | Herald Investment vs. Tyson Foods Cl | Herald Investment vs. Spirent Communications plc |
| Global Net vs. Waste Management | Global Net vs. PureTech Health plc | Global Net vs. Roper Technologies | Global Net vs. Coor Service Management |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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