Correlation Between Global Blue and Dlocal

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

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

Diversification Opportunities for Global Blue and Dlocal

0.61

Correlation Coefficient

Global Blue  Dlocal

Poor diversification

The 3 months correlation between Global and Dlocal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and Dlocal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dlocal and Global Blue 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 Blue Group are associated (or correlated) with Dlocal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dlocal has no effect on the direction of Global Blue i.e., Global Blue and Dlocal go up and down completely randomly.

Pair Corralation between Global Blue and Dlocal

Allowing for the 90-day total investment horizon Global Blue is expected to generate 5.31 times less return on investment than Dlocal. In addition to that, Global Blue is 1.01 times more volatile than Dlocal. It trades about 0.03 of its total potential returns per unit of risk. Dlocal is currently generating about 0.18 per unit of volatility. If you would invest  851.00  in Dlocal on September 12, 2024 and sell it today you would earn a total of  331.00  from holding Dlocal or generate 38.9% return on investment over 90 days.

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

Global Blue Group  vs.  Dlocal

Global Blue Group

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Global Blue may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dlocal

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dlocal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Dlocal displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Blue and Dlocal

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

The idea behind Global Blue Group and Dlocal 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.