Correlation Between Bill and Global E

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

By analyzing existing cross correlation between Bill Com Holdings and Global E Online, you can compare the effects of market volatilities on Bill and Global E 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 Bill with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and Global E.

Diversification Opportunities for Bill and Global E

0.87

Correlation Coefficient

Bill  Global E

Very poor diversification

The 3 months correlation between Bill and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and Bill 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 Bill Com Holdings are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Bill i.e., Bill and Global E go up and down completely randomly.

Pair Corralation between Bill and Global E

Given the investment horizon of 90 days Bill is expected to generate 1.88 times less return on investment than Global E. In addition to that, Bill is 1.13 times more volatile than Global E Online. It trades about 0.04 of its total potential returns per unit of risk. Global E Online is currently generating about 0.08 per unit of volatility. If you would invest  3,415  in Global E Online on October 3, 2024 and sell it today you would earn a total of  2,038  from holding Global E Online or generate 59.68% return on investment over 90 days.

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

Bill Com Holdings  vs.  Global E Online

Bill Com Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Global E Online

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bill and Global E

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

The idea behind Bill Com Holdings and Global E Online 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.