Correlation Between Global E and DoorDash

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

Diversification Opportunities for Global E and DoorDash

-0.5

Correlation Coefficient

Global E  DoorDash

Very good diversification

The 3 months correlation between Global and DoorDash is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and DoorDash Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoorDash Class A 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 DoorDash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoorDash Class A has no effect on the direction of Global E i.e., Global E and DoorDash go up and down completely randomly.

Pair Corralation between Global E and DoorDash

Given the investment horizon of 90 days Global E Online is expected to under-perform the DoorDash. In addition to that, Global E is 1.33 times more volatile than DoorDash Class A. It trades about -0.12 of its total potential returns per unit of risk. DoorDash Class A is currently generating about -0.14 per unit of volatility. If you would invest  13,825  in DoorDash Class A on February 1, 2024 and sell it today you would lose (899.00) from holding DoorDash Class A or give up 6.5% of portfolio value over 90 days.

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

Global E Online  vs.  DoorDash Class A

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 latest conflicting performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

DoorDash Class A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DoorDash Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, DoorDash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global E and DoorDash

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

The idea behind Global E Online and DoorDash Class A 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.