Correlation Between Valens and Globalfoundries

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

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

Diversification Opportunities for Valens and Globalfoundries

0.13

Correlation Coefficient

Valens  Globalfoundries

Average diversification

The 3 months correlation between Valens and Globalfoundries is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries and Valens 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 Valens are associated (or correlated) with Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Valens i.e., Valens and Globalfoundries go up and down completely randomly.

Pair Corralation between Valens and Globalfoundries

Considering the 90-day investment horizon Valens is expected to under-perform the Globalfoundries. In addition to that, Valens is 1.38 times more volatile than Globalfoundries. It trades about -0.04 of its total potential returns per unit of risk. Globalfoundries is currently generating about 0.04 per unit of volatility. If you would invest  3,935  in Globalfoundries on September 21, 2024 and sell it today you would earn a total of  235.00  from holding Globalfoundries or generate 5.97% return on investment over 90 days.

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

Valens  vs.  Globalfoundries

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Globalfoundries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Valens and Globalfoundries

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

The idea behind Valens and Globalfoundries 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..