Correlation Between Cembra Money and Global Net

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

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

Diversification Opportunities for Cembra Money and Global Net

-0.7

Correlation Coefficient

Cembra Money  Global Net

Excellent diversification

The 3 months correlation between Cembra and Global is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Cembra Money 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 Cembra Money Bank are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Cembra Money i.e., Cembra Money and Global Net go up and down completely randomly.

Pair Corralation between Cembra Money and Global Net

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.3 times more return on investment than Global Net. However, Cembra Money Bank is 3.33 times less risky than Global Net. It trades about 0.05 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.01 per unit of risk. If you would invest  6,564  in Cembra Money Bank on September 25, 2024 and sell it today you would earn a total of  1,591  from holding Cembra Money Bank or generate 24.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.28%
Values	Daily Returns

Cembra Money Bank  vs.  Global Net Lease

Cembra Money Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cembra Money is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Cembra Money and Global Net

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

The idea behind Cembra Money Bank and Global Net Lease 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.