Correlation Between Timken and Global Partner
Can any of the company-specific risk be diversified away by investing in both Timken and Global Partner 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 Partner 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 Partner Acq, you can compare the effects of market volatilities on Timken and Global Partner 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 Partner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Global Partner.
Diversification Opportunities for Timken and Global Partner
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Timken and Global is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Global Partner Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partner Acq 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 Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partner Acq has no effect on the direction of Timken i.e., Timken and Global Partner go up and down completely randomly.
Pair Corralation between Timken and Global Partner
If you would invest 7,429 in Timken Company on September 13, 2024 and sell it today you would earn a total of 154.00 from holding Timken Company or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Timken Company vs. Global Partner Acq
Performance |
| Timeline |
| Timken Company |
| Global Partner Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Timken and Global Partner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Global Partner
The main advantage of trading using opposite Timken and Global Partner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken position performs unexpectedly, Global Partner 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 Partner will offset losses from the drop in Global Partner's long position.The idea behind Timken Company and Global Partner Acq 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 Partner vs. Simon Property Group | Global Partner vs. The Gap, | Global Partner vs. Citi Trends | Global Partner vs. Burlington Stores |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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