Correlation Between Global Net and Prosiebensat

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

By analyzing existing cross correlation between Global Net Lease and Prosiebensat 1 Media, you can compare the effects of market volatilities on Global Net and Prosiebensat 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 Net with a short position of Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Prosiebensat.

Diversification Opportunities for Global Net and Prosiebensat

0.64

Correlation Coefficient

Global Net  Prosiebensat

Poor diversification

The 3 months correlation between Global and Prosiebensat is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media and Global Net 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 Net Lease are associated (or correlated) with Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Global Net i.e., Global Net and Prosiebensat go up and down completely randomly.

Pair Corralation between Global Net and Prosiebensat

Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Prosiebensat. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 1.82 times less risky than Prosiebensat. The stock trades about -0.2 of its potential returns per unit of risk. The Prosiebensat 1 Media is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  531.00  in Prosiebensat 1 Media on September 15, 2024 and sell it today you would earn a total of  25.00  from holding Prosiebensat 1 Media or generate 4.71% return on investment over 90 days.

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

Global Net Lease  vs.  Prosiebensat 1 Media

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Prosiebensat 1 Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prosiebensat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Net and Prosiebensat

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

The idea behind Global Net Lease and Prosiebensat 1 Media 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.