Correlation Between System1 and Global Payments
Can any of the company-specific risk be diversified away by investing in both System1 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 System1 and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System1 and Global Payments, you can compare the effects of market volatilities on System1 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 System1 with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of System1 and Global Payments.
Diversification Opportunities for System1 and Global Payments
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between System1 and Global is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding System1 and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and System1 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 System1 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 System1 i.e., System1 and Global Payments go up and down completely randomly.
Pair Corralation between System1 and Global Payments
Considering the 90-day investment horizon System1 is expected to under-perform the Global Payments. In addition to that, System1 is 1.71 times more volatile than Global Payments. It trades about -0.05 of its total potential returns per unit of risk. Global Payments is currently generating about 0.07 per unit of volatility. If you would invest 10,934 in Global Payments on September 3, 2024 and sell it today you would earn a total of 962.00 from holding Global Payments or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System1 vs. Global Payments
Performance |
| Timeline |
| System1 |
| Global Payments |
System1 and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System1 and Global Payments
The main advantage of trading using opposite System1 and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System1 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.| System1 vs. Network 1 Technologies | System1 vs. Maximus | System1 vs. First Advantage Corp | System1 vs. Civeo Corp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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