Correlation Between Timken and Global Net
Can any of the company-specific risk be diversified away by investing in both Timken 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 Timken and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timken Company and Global Net Lease, you can compare the effects of market volatilities on Timken 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 Timken with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Global Net.
Diversification Opportunities for Timken and Global Net
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Timken and Global is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company 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 Timken 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 Timken Company 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 Timken i.e., Timken and Global Net go up and down completely randomly.
Pair Corralation between Timken and Global Net
Considering the 90-day investment horizon Timken Company is expected to under-perform the Global Net. In addition to that, Timken is 4.21 times more volatile than Global Net Lease. It trades about -0.07 of its total potential returns per unit of risk. Global Net Lease is currently generating about 0.23 per unit of volatility. If you would invest 2,236 in Global Net Lease on September 2, 2024 and sell it today you would earn a total of 94.00 from holding Global Net Lease or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timken Company vs. Global Net Lease
Performance |
| Timeline |
| Timken Company |
| Global Net Lease |
Timken and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Global Net
The main advantage of trading using opposite Timken and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken 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.The idea behind Timken Company and Global Net Lease pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Net vs. China Tontine Wines | Global Net vs. Microbot Medical | Global Net vs. Willamette Valley Vineyards | Global Net vs. Brandywine Realty Trust |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |