Correlation Between Globe Union and Lifestyle Global

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

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

Diversification Opportunities for Globe Union and Lifestyle Global

0.77

Correlation Coefficient

Globe Union  Lifestyle Global

Poor diversification

The 3 months correlation between Globe and Lifestyle is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Globe Union Industrial and Lifestyle Global Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Global Ent and Globe Union 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 Globe Union Industrial are associated (or correlated) with Lifestyle Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Global Ent has no effect on the direction of Globe Union i.e., Globe Union and Lifestyle Global go up and down completely randomly.

Pair Corralation between Globe Union and Lifestyle Global

Assuming the 90 days trading horizon Globe Union Industrial is expected to under-perform the Lifestyle Global. In addition to that, Globe Union is 2.03 times more volatile than Lifestyle Global Enterprise. It trades about -0.18 of its total potential returns per unit of risk. Lifestyle Global Enterprise is currently generating about -0.18 per unit of volatility. If you would invest  2,900  in Lifestyle Global Enterprise on October 25, 2024 and sell it today you would lose (240.00) from holding Lifestyle Global Enterprise or give up 8.28% of portfolio value over 90 days.

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

Globe Union Industrial  vs.  Lifestyle Global Enterprise

Globe Union Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Union Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lifestyle Global Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifestyle Global Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Globe Union and Lifestyle Global

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

The idea behind Globe Union Industrial and Lifestyle Global Enterprise 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..