Correlation Between Experian Plc and Global Payments
Can any of the company-specific risk be diversified away by investing in both Experian Plc and Global Payments 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 Experian Plc and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Experian plc and Global Payments, you can compare the effects of market volatilities on Experian Plc and Global Payments 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 Experian Plc with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Experian Plc and Global Payments.
Diversification Opportunities for Experian Plc and Global Payments
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Experian and Global is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Experian plc and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Experian Plc 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 Experian plc are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of Experian Plc i.e., Experian Plc and Global Payments go up and down completely randomly.
Pair Corralation between Experian Plc and Global Payments
Assuming the 90 days horizon Experian plc is expected to under-perform the Global Payments. But the stock apears to be less risky and, when comparing its historical volatility, Experian plc is 1.59 times less risky than Global Payments. The stock trades about -0.07 of its potential returns per unit of risk. The Global Payments is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 9,310 in Global Payments on August 30, 2024 and sell it today you would earn a total of 1,820 from holding Global Payments or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Experian plc vs. Global Payments
Performance |
| Timeline |
| Experian plc |
| Global Payments |
Experian Plc and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Experian Plc and Global Payments
The main advantage of trading using opposite Experian Plc and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Experian Plc position performs unexpectedly, Global Payments 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 Payments will offset losses from the drop in Global Payments' long position.| Experian Plc vs. Automatic Data Processing | Experian Plc vs. Superior Plus Corp | Experian Plc vs. SIVERS SEMICONDUCTORS AB | Experian Plc vs. Talanx AG |
| Global Payments vs. Automatic Data Processing | Global Payments vs. Superior Plus Corp | Global Payments vs. SIVERS SEMICONDUCTORS AB | Global Payments vs. Talanx AG |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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