Correlation Between Global E and Farfetch

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

By analyzing existing cross correlation between Global E Online and Farfetch Ltd Class, you can compare the effects of market volatilities on Global E and Farfetch 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 E with a short position of Farfetch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Farfetch.

Diversification Opportunities for Global E and Farfetch

0.0

Correlation Coefficient

Global E  Farfetch

Pay attention - limited upside

The 3 months correlation between Global and Farfetch is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Farfetch Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Class and Global E 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 E Online are associated (or correlated) with Farfetch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farfetch Class has no effect on the direction of Global E i.e., Global E and Farfetch go up and down completely randomly.

Pair Corralation between Global E and Farfetch

If you would invest (100.00) in Farfetch Ltd Class on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Farfetch Ltd Class or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Global E Online  vs.  Farfetch Ltd Class

Global E Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Farfetch Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farfetch Ltd Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Farfetch is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global E and Farfetch

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

The idea behind Global E Online and Farfetch Ltd Class 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.