Correlation Between RB Global and Global Payments
Can any of the company-specific risk be diversified away by investing in both RB Global 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 RB Global and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RB Global and Global Payments, you can compare the effects of market volatilities on RB Global 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 RB Global with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Global and Global Payments.
Diversification Opportunities for RB Global and Global Payments
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBA and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and RB Global 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 RB Global 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 RB Global i.e., RB Global and Global Payments go up and down completely randomly.
Pair Corralation between RB Global and Global Payments
Considering the 90-day investment horizon RB Global is expected to generate 1.15 times less return on investment than Global Payments. But when comparing it to its historical volatility, RB Global is 1.68 times less risky than Global Payments. It trades about 0.5 of its potential returns per unit of risk. Global Payments is currently generating about 0.34 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RB Global vs. Global Payments
Performance |
| Timeline |
| RB Global |
| Global Payments |
RB Global and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Global and Global Payments
The main advantage of trading using opposite RB Global and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Global 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.| RB Global vs. First Advantage Corp | RB Global vs. Civeo Corp | RB Global vs. Performant Financial | RB Global vs. Network 1 Technologies |
| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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