Correlation Between Global E and Australia

Can any of the company-specific risk be diversified away by investing in both Global E and Australia 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 Global E and Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global E Online and Australia And New, you can compare the effects of market volatilities on Global E and Australia 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 Global E with a short position of Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Australia.

Diversification Opportunities for Global E and Australia

-0.64

Correlation Coefficient

Global E  Australia

Excellent diversification

The 3 months correlation between Global and Australia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Australia And New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia And New and Global E 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 Global E Online are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia And New has no effect on the direction of Global E i.e., Global E and Australia go up and down completely randomly.

Pair Corralation between Global E and Australia

If you would invest  1,608  in Australia And New on March 4, 2024 and sell it today you would earn a total of  0.00  from holding Australia And New or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Global E Online  vs.  Australia And New

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Global E is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Australia And New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australia And New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Australia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global E and Australia

The main advantage of trading using opposite Global E and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.

The idea behind Global E Online and Australia And New 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.