Correlation Between Global Payments and All American

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

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

Diversification Opportunities for Global Payments and All American

0.0

Correlation Coefficient

Global Payments  All American

Pay attention - limited upside

The 3 months correlation between Global and All is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and All American Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Pet and Global Payments 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 Payments are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Pet has no effect on the direction of Global Payments i.e., Global Payments and All American go up and down completely randomly.

Pair Corralation between Global Payments and All American

Considering the 90-day investment horizon Global Payments is expected to generate 0.05 times more return on investment than All American. However, Global Payments is 19.67 times less risky than All American. It trades about -0.2 of its potential returns per unit of risk. All American Pet is currently generating about -0.22 per unit of risk. If you would invest  11,912  in Global Payments on September 28, 2024 and sell it today you would lose (536.00) from holding Global Payments or give up 4.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Payments  vs.  All American Pet

Global Payments

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Global Payments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

All American Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Global Payments and All American

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

The idea behind Global Payments and All American Pet 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.