Correlation Between Globant SA and CLARIVATE PLC

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

By analyzing existing cross correlation between Globant SA and CLARIVATE PLC, you can compare the effects of market volatilities on Globant SA and CLARIVATE PLC 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 Globant SA with a short position of CLARIVATE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globant SA and CLARIVATE PLC.

Diversification Opportunities for Globant SA and CLARIVATE PLC

0.03

Correlation Coefficient

Globant SA  CLARIVATE PLC

Significant diversification

The 3 months correlation between Globant and CLARIVATE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Globant SA and CLARIVATE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLARIVATE PLC and Globant SA 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 Globant SA are associated (or correlated) with CLARIVATE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLARIVATE PLC has no effect on the direction of Globant SA i.e., Globant SA and CLARIVATE PLC go up and down completely randomly.

Pair Corralation between Globant SA and CLARIVATE PLC

Given the investment horizon of 90 days Globant SA is expected to generate 0.72 times more return on investment than CLARIVATE PLC. However, Globant SA is 1.39 times less risky than CLARIVATE PLC. It trades about 0.07 of its potential returns per unit of risk. CLARIVATE PLC is currently generating about 0.02 per unit of risk. If you would invest  20,855  in Globant SA on November 19, 2024 and sell it today you would earn a total of  1,591  from holding Globant SA or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Globant SA  vs.  CLARIVATE PLC

Globant SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

CLARIVATE PLC

Risk-Adjusted Performance

Weak

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

Pair Trading with Globant SA and CLARIVATE PLC

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

The idea behind Globant SA and CLARIVATE PLC 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.