Correlation Between White Fox and Global Payments

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

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

Diversification Opportunities for White Fox and Global Payments

0.63

Correlation Coefficient

White Fox  Global Payments

Poor diversification

The 3 months correlation between White and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding White Fox Ventures and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and White Fox 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 White Fox Ventures are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of White Fox i.e., White Fox and Global Payments go up and down completely randomly.

Pair Corralation between White Fox and Global Payments

Given the investment horizon of 90 days White Fox Ventures is expected to generate 25.15 times more return on investment than Global Payments. However, White Fox is 25.15 times more volatile than Global Payments. It trades about 0.08 of its potential returns per unit of risk. Global Payments is currently generating about 0.14 per unit of risk. If you would invest  0.25  in White Fox Ventures on October 3, 2024 and sell it today you would lose (0.11) from holding White Fox Ventures or give up 44.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

White Fox Ventures  vs.  Global Payments

White Fox Ventures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in White Fox Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, White Fox showed solid returns over the last few months and may actually be approaching a breakup point.

Global Payments

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Global Payments displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with White Fox and Global Payments

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

The idea behind White Fox Ventures and Global Payments 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.