Correlation Between Global Business and Riskified

Can any of the company-specific risk be diversified away by investing in both Global Business and Riskified 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 Riskified 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 Riskified, you can compare the effects of market volatilities on Global Business and Riskified 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 Riskified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Business and Riskified.

Diversification Opportunities for Global Business and Riskified

-0.35

Correlation Coefficient

Global Business  Riskified

Very good diversification

The 3 months correlation between Global and Riskified is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and Riskified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskified 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 Riskified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskified has no effect on the direction of Global Business i.e., Global Business and Riskified go up and down completely randomly.

Pair Corralation between Global Business and Riskified

Given the investment horizon of 90 days Global Business Travel is expected to generate 1.06 times more return on investment than Riskified. However, Global Business is 1.06 times more volatile than Riskified. It trades about 0.21 of its potential returns per unit of risk. Riskified is currently generating about -0.05 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Business Travel  vs.  Riskified

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.

Riskified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riskified has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Riskified is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Business and Riskified

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

The idea behind Global Business Travel and Riskified 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.