Correlation Between Global E and Eterna Therapeutics

Can any of the company-specific risk be diversified away by investing in both Global E and Eterna Therapeutics 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 Eterna Therapeutics 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 Eterna Therapeutics, you can compare the effects of market volatilities on Global E and Eterna Therapeutics 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 Eterna Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Eterna Therapeutics.

Diversification Opportunities for Global E and Eterna Therapeutics

0.49

Correlation Coefficient

Global E  Eterna Therapeutics

Very weak diversification

The 3 months correlation between Global and Eterna is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Eterna Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eterna Therapeutics 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 Eterna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eterna Therapeutics has no effect on the direction of Global E i.e., Global E and Eterna Therapeutics go up and down completely randomly.

Pair Corralation between Global E and Eterna Therapeutics

Given the investment horizon of 90 days Global E Online is expected to generate 0.55 times more return on investment than Eterna Therapeutics. However, Global E Online is 1.81 times less risky than Eterna Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Eterna Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  3,332  in Global E Online on March 15, 2024 and sell it today you would lose (146.00) from holding Global E Online or give up 4.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Global E Online  vs.  Eterna Therapeutics

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.

Eterna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eterna Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eterna Therapeutics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global E and Eterna Therapeutics

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

The idea behind Global E Online and Eterna Therapeutics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.