Correlation Between Global Blue and Monolithic Power

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

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

Diversification Opportunities for Global Blue and Monolithic Power

-0.32

Correlation Coefficient

Global Blue  Monolithic Power

Very good diversification

The 3 months correlation between Global and Monolithic is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and Monolithic Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monolithic Power Systems and Global Blue 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 Global Blue Group are associated (or correlated) with Monolithic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monolithic Power Systems has no effect on the direction of Global Blue i.e., Global Blue and Monolithic Power go up and down completely randomly.

Pair Corralation between Global Blue and Monolithic Power

Allowing for the 90-day total investment horizon Global Blue Group is expected to generate 0.79 times more return on investment than Monolithic Power. However, Global Blue Group is 1.27 times less risky than Monolithic Power. It trades about 0.06 of its potential returns per unit of risk. Monolithic Power Systems is currently generating about 0.02 per unit of risk. If you would invest  675.00  in Global Blue Group on December 29, 2024 and sell it today you would earn a total of  61.00  from holding Global Blue Group or generate 9.04% return on investment over 90 days.

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

Global Blue Group  vs.  Monolithic Power Systems

Global Blue Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Monolithic Power Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monolithic Power Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Monolithic Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global Blue and Monolithic Power

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

The idea behind Global Blue Group and Monolithic Power Systems 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.