Correlation Between Firm Capital and Global Net

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

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

Diversification Opportunities for Firm Capital and Global Net

-0.47

Correlation Coefficient

Firm Capital  Global Net

Very good diversification

The 3 months correlation between Firm and Global is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Firm Capital Property and Global Net Lease, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease, and Firm Capital 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 Firm Capital Property are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease, has no effect on the direction of Firm Capital i.e., Firm Capital and Global Net go up and down completely randomly.

Pair Corralation between Firm Capital and Global Net

Assuming the 90 days horizon Firm Capital Property is expected to generate 1.09 times more return on investment than Global Net. However, Firm Capital is 1.09 times more volatile than Global Net Lease,. It trades about 0.09 of its potential returns per unit of risk. Global Net Lease, is currently generating about -0.17 per unit of risk. If you would invest  380.00  in Firm Capital Property on September 5, 2024 and sell it today you would earn a total of  30.00  from holding Firm Capital Property or generate 7.89% return on investment over 90 days.

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

Firm Capital Property  vs.  Global Net Lease,

Firm Capital Property

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Property are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Firm Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Net Lease,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Firm Capital and Global Net

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

The idea behind Firm Capital Property and Global Net Lease, 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.