Correlation Between Global Payments and Wolters Kluwer

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

By analyzing existing cross correlation between Global Payments and Wolters Kluwer NV, you can compare the effects of market volatilities on Global Payments and Wolters Kluwer 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 Wolters Kluwer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and Wolters Kluwer.

Diversification Opportunities for Global Payments and Wolters Kluwer

-0.32

Correlation Coefficient

Global Payments  Wolters Kluwer

Very good diversification

The 3 months correlation between Global and Wolters is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV 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 Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of Global Payments i.e., Global Payments and Wolters Kluwer go up and down completely randomly.

Pair Corralation between Global Payments and Wolters Kluwer

Considering the 90-day investment horizon Global Payments is expected to generate 1.53 times more return on investment than Wolters Kluwer. However, Global Payments is 1.53 times more volatile than Wolters Kluwer NV. It trades about 0.02 of its potential returns per unit of risk. Wolters Kluwer NV is currently generating about -0.04 per unit of risk. If you would invest  11,074  in Global Payments on September 23, 2024 and sell it today you would earn a total of  129.00  from holding Global Payments or generate 1.16% return on investment over 90 days.

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

Global Payments  vs.  Wolters Kluwer NV

Global Payments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global Payments is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Wolters Kluwer NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wolters Kluwer is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Payments and Wolters Kluwer

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

The idea behind Global Payments and Wolters Kluwer NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.