Correlation Between Envestnet and Global Business

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

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

Diversification Opportunities for Envestnet and Global Business

0.66

Correlation Coefficient

Envestnet  Global Business

Poor diversification

The 3 months correlation between Envestnet and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Envestnet and Global Business Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Business Travel and Envestnet 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 Envestnet are associated (or correlated) with Global Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Business Travel has no effect on the direction of Envestnet i.e., Envestnet and Global Business go up and down completely randomly.

Pair Corralation between Envestnet and Global Business

Considering the 90-day investment horizon Envestnet is expected to generate 46.04 times less return on investment than Global Business. But when comparing it to its historical volatility, Envestnet is 21.64 times less risky than Global Business. It trades about 0.1 of its potential returns per unit of risk. Global Business Travel is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  699.00  in Global Business Travel on August 30, 2024 and sell it today you would earn a total of  230.00  from holding Global Business Travel or generate 32.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Envestnet  vs.  Global Business Travel

Envestnet

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Envestnet are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Envestnet is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Global Business Travel

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Business Travel are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Global Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envestnet and Global Business

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

The idea behind Envestnet and Global Business Travel 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.