Correlation Between Global E and Overstockcom

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

Diversification Opportunities for Global E and Overstockcom

0.79

Correlation Coefficient

Global E  Overstockcom

Poor diversification

The 3 months correlation between Global and Overstockcom is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Overstockcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstockcom 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 Overstockcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstockcom has no effect on the direction of Global E i.e., Global E and Overstockcom go up and down completely randomly.

Pair Corralation between Global E and Overstockcom

If you would invest  3,844  in Global E Online on September 1, 2024 and sell it today you would earn a total of  1,384  from holding Global E Online or generate 36.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Global E Online  vs.  Overstockcom

Global E Online

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Overstockcom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overstockcom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Overstockcom is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Global E and Overstockcom

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

The idea behind Global E Online and Overstockcom 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..