Correlation Between Confluent and Global E

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

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

Diversification Opportunities for Confluent and Global E

0.85

Correlation Coefficient

Confluent  Global E

Very poor diversification

The 3 months correlation between Confluent and Global is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and Confluent 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 Confluent are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Confluent i.e., Confluent and Global E go up and down completely randomly.

Pair Corralation between Confluent and Global E

Given the investment horizon of 90 days Confluent is expected to generate 1.05 times less return on investment than Global E. In addition to that, Confluent is 1.34 times more volatile than Global E Online. It trades about 0.22 of its total potential returns per unit of risk. Global E Online is currently generating about 0.3 per unit of volatility. If you would invest  3,324  in Global E Online on September 1, 2024 and sell it today you would earn a total of  1,904  from holding Global E Online or generate 57.28% return on investment over 90 days.

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

Confluent  vs.  Global E Online

Confluent

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global E Online

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Confluent and Global E

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

The idea behind Confluent and Global E Online 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.