Correlation Between Remitly Global and Trend Micro

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

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

Diversification Opportunities for Remitly Global and Trend Micro

-0.37

Correlation Coefficient

Remitly Global  Trend Micro

Very good diversification

The 3 months correlation between Remitly and Trend is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Remitly Global and Trend Micro ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Micro ADR and Remitly Global 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 Remitly Global are associated (or correlated) with Trend Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Micro ADR has no effect on the direction of Remitly Global i.e., Remitly Global and Trend Micro go up and down completely randomly.

Pair Corralation between Remitly Global and Trend Micro

Given the investment horizon of 90 days Remitly Global is expected to generate 1.72 times more return on investment than Trend Micro. However, Remitly Global is 1.72 times more volatile than Trend Micro ADR. It trades about 0.3 of its potential returns per unit of risk. Trend Micro ADR is currently generating about -0.08 per unit of risk. If you would invest  1,339  in Remitly Global on September 28, 2024 and sell it today you would earn a total of  925.00  from holding Remitly Global or generate 69.08% return on investment over 90 days.

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

Remitly Global  vs.  Trend Micro ADR

Remitly Global

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Remitly Global are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Remitly Global showed solid returns over the last few months and may actually be approaching a breakup point.

Trend Micro ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trend Micro ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Remitly Global and Trend Micro

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

The idea behind Remitly Global and Trend Micro ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.