Correlation Between Global Green and BA Airport
Can any of the company-specific risk be diversified away by investing in both Global Green and BA Airport 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 Green and BA Airport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Green Chemicals and BA Airport Leasehold, you can compare the effects of market volatilities on Global Green and BA Airport 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 Green with a short position of BA Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Green and BA Airport.
Diversification Opportunities for Global Green and BA Airport
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and BAREIT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global Green Chemicals and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold and Global Green 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 Green Chemicals are associated (or correlated) with BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of Global Green i.e., Global Green and BA Airport go up and down completely randomly.
Pair Corralation between Global Green and BA Airport
Assuming the 90 days trading horizon Global Green Chemicals is expected to generate 4.2 times more return on investment than BA Airport. However, Global Green is 4.2 times more volatile than BA Airport Leasehold. It trades about 0.11 of its potential returns per unit of risk. BA Airport Leasehold is currently generating about 0.02 per unit of risk. If you would invest 409.00 in Global Green Chemicals on December 30, 2024 and sell it today you would earn a total of 87.00 from holding Global Green Chemicals or generate 21.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Green Chemicals vs. BA Airport Leasehold
Performance |
Timeline |
Global Green Chemicals |
BA Airport Leasehold |
Global Green and BA Airport Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Green and BA Airport
The main advantage of trading using opposite Global Green and BA Airport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Green position performs unexpectedly, BA Airport 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 BA Airport will offset losses from the drop in BA Airport's long position.Global Green vs. Ichitan Group Public | Global Green vs. Indorama Ventures PCL | Global Green vs. BCPG Public | Global Green vs. IRPC Public |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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