Correlation Between Globalfoundries and 771196BY7

Can any of the company-specific risk be diversified away by investing in both Globalfoundries and 771196BY7 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 Globalfoundries and 771196BY7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globalfoundries and ROSW 2607 13 DEC 51, you can compare the effects of market volatilities on Globalfoundries and 771196BY7 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 Globalfoundries with a short position of 771196BY7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and 771196BY7.

Diversification Opportunities for Globalfoundries and 771196BY7

-0.42

Correlation Coefficient

Globalfoundries  771196BY7

Very good diversification

The 3 months correlation between Globalfoundries and 771196BY7 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and ROSW 2607 13 DEC 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROSW 2607 13 and Globalfoundries 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 Globalfoundries are associated (or correlated) with 771196BY7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROSW 2607 13 has no effect on the direction of Globalfoundries i.e., Globalfoundries and 771196BY7 go up and down completely randomly.

Pair Corralation between Globalfoundries and 771196BY7

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the 771196BY7. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.02 times less risky than 771196BY7. The stock trades about -0.13 of its potential returns per unit of risk. The ROSW 2607 13 DEC 51 is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,320  in ROSW 2607 13 DEC 51 on October 11, 2024 and sell it today you would lose (43.00) from holding ROSW 2607 13 DEC 51 or give up 0.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Globalfoundries  vs.  ROSW 2607 13 DEC 51

Globalfoundries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Globalfoundries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

ROSW 2607 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROSW 2607 13 DEC 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 771196BY7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Globalfoundries and 771196BY7

The main advantage of trading using opposite Globalfoundries and 771196BY7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, 771196BY7 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 771196BY7 will offset losses from the drop in 771196BY7's long position.

The idea behind Globalfoundries and ROSW 2607 13 DEC 51 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.