Correlation Between Global Net and Weiss Korea

Can any of the company-specific risk be diversified away by investing in both Global Net and Weiss Korea 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 Weiss Korea 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 Weiss Korea Opportunity, you can compare the effects of market volatilities on Global Net and Weiss Korea 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 Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Weiss Korea.

Diversification Opportunities for Global Net and Weiss Korea

0.44

Correlation Coefficient

Global Net  Weiss Korea

Very weak diversification

The 3 months correlation between Global and Weiss is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity 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 Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of Global Net i.e., Global Net and Weiss Korea go up and down completely randomly.

Pair Corralation between Global Net and Weiss Korea

Assuming the 90 days trading horizon Global Net Lease is expected to generate 1.15 times more return on investment than Weiss Korea. However, Global Net is 1.15 times more volatile than Weiss Korea Opportunity. It trades about 0.15 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about 0.03 per unit of risk. If you would invest  688.00  in Global Net Lease on December 24, 2024 and sell it today you would earn a total of  102.00  from holding Global Net Lease or generate 14.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Global Net Lease  vs.  Weiss Korea Opportunity

Global Net Lease

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global Net unveiled solid returns over the last few months and may actually be approaching a breakup point.

Weiss Korea Opportunity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weiss Korea Opportunity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Weiss Korea is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global Net and Weiss Korea

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

The idea behind Global Net Lease and Weiss Korea Opportunity 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.