Correlation Between Fiserv, and Globant SA

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

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

Diversification Opportunities for Fiserv, and Globant SA

0.75

Correlation Coefficient

Fiserv,  Globant SA

Poor diversification

The 3 months correlation between Fiserv, and Globant is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv, and Globant SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globant SA and Fiserv, 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 Fiserv, are associated (or correlated) with Globant SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globant SA has no effect on the direction of Fiserv, i.e., Fiserv, and Globant SA go up and down completely randomly.

Pair Corralation between Fiserv, and Globant SA

Allowing for the 90-day total investment horizon Fiserv, is expected to generate 0.4 times more return on investment than Globant SA. However, Fiserv, is 2.49 times less risky than Globant SA. It trades about 0.36 of its potential returns per unit of risk. Globant SA is currently generating about 0.09 per unit of risk. If you would invest  17,460  in Fiserv, on August 30, 2024 and sell it today you would earn a total of  4,599  from holding Fiserv, or generate 26.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Fiserv,  vs.  Globant SA

Fiserv,

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv, are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Fiserv, demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Globant SA

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fiserv, and Globant SA

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

The idea behind Fiserv, and Globant SA 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.