Correlation Between Global Business and Euronet Worldwide
Can any of the company-specific risk be diversified away by investing in both Global Business and Euronet Worldwide 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 Business and Euronet Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Business Travel and Euronet Worldwide, you can compare the effects of market volatilities on Global Business and Euronet Worldwide 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 Business with a short position of Euronet Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Business and Euronet Worldwide.
Diversification Opportunities for Global Business and Euronet Worldwide
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Euronet is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and Euronet Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronet Worldwide and Global Business 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 Business Travel are associated (or correlated) with Euronet Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronet Worldwide has no effect on the direction of Global Business i.e., Global Business and Euronet Worldwide go up and down completely randomly.
Pair Corralation between Global Business and Euronet Worldwide
Given the investment horizon of 90 days Global Business Travel is expected to under-perform the Euronet Worldwide. But the stock apears to be less risky and, when comparing its historical volatility, Global Business Travel is 1.4 times less risky than Euronet Worldwide. The stock trades about -0.1 of its potential returns per unit of risk. The Euronet Worldwide is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 10,547 in Euronet Worldwide on December 3, 2024 and sell it today you would lose (617.00) from holding Euronet Worldwide or give up 5.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Business Travel vs. Euronet Worldwide
Performance |
Timeline |
Global Business Travel |
Euronet Worldwide |
Global Business and Euronet Worldwide Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Business and Euronet Worldwide
The main advantage of trading using opposite Global Business and Euronet Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Business position performs unexpectedly, Euronet Worldwide 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 Euronet Worldwide will offset losses from the drop in Euronet Worldwide's long position.Global Business vs. Meridianlink | Global Business vs. Alkami Technology | Global Business vs. Blackbaud | Global Business vs. Enfusion |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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