Correlation Between Izertis Sa and Global Dominion

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

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

Diversification Opportunities for Izertis Sa and Global Dominion

0.68

Correlation Coefficient

Izertis Sa  Global Dominion

Poor diversification

The 3 months correlation between Izertis and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Izertis Sa and Global Dominion Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dominion Access and Izertis Sa 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 Izertis Sa are associated (or correlated) with Global Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dominion Access has no effect on the direction of Izertis Sa i.e., Izertis Sa and Global Dominion go up and down completely randomly.

Pair Corralation between Izertis Sa and Global Dominion

Assuming the 90 days trading horizon Izertis Sa is expected to under-perform the Global Dominion. But the stock apears to be less risky and, when comparing its historical volatility, Izertis Sa is 2.6 times less risky than Global Dominion. The stock trades about -0.14 of its potential returns per unit of risk. The Global Dominion Access is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  288.00  in Global Dominion Access on September 13, 2024 and sell it today you would lose (14.00) from holding Global Dominion Access or give up 4.86% of portfolio value over 90 days.

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

Izertis Sa  vs.  Global Dominion Access

Izertis Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Izertis Sa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Izertis Sa is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Global Dominion Access

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Dominion Access has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Global Dominion is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Izertis Sa and Global Dominion

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

The idea behind Izertis Sa and Global Dominion Access 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..