Correlation Between SP Global and FactSet Research

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

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

Diversification Opportunities for SP Global and FactSet Research

0.0

Correlation Coefficient

SP Global  FactSet Research

Pay attention - limited upside

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

Pair Corralation between SP Global and FactSet Research

Given the investment horizon of 90 days SP Global is expected to generate 6.45 times less return on investment than FactSet Research. But when comparing it to its historical volatility, SP Global is 1.22 times less risky than FactSet Research. It trades about 0.04 of its potential returns per unit of risk. FactSet Research Systems is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  42,284  in FactSet Research Systems on August 30, 2024 and sell it today you would earn a total of  6,666  from holding FactSet Research Systems or generate 15.76% return on investment over 90 days.

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

SP Global  vs.  FactSet Research Systems

SP Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SP Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, SP Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

FactSet Research Systems

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, FactSet Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SP Global and FactSet Research

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

The idea behind SP Global and FactSet Research Systems 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .