Correlation Between Global Partners and Eastern

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

By analyzing existing cross correlation between Global Partners LP and Eastern Co, you can compare the effects of market volatilities on Global Partners and Eastern 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 Partners with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and Eastern.

Diversification Opportunities for Global Partners and Eastern

-0.75

Correlation Coefficient

Global Partners  Eastern

Pay attention - limited upside

The 3 months correlation between Global and Eastern is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Global Partners 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 Partners LP are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Global Partners i.e., Global Partners and Eastern go up and down completely randomly.

Pair Corralation between Global Partners and Eastern

Assuming the 90 days trading horizon Global Partners is expected to generate 1.8 times less return on investment than Eastern. But when comparing it to its historical volatility, Global Partners LP is 7.17 times less risky than Eastern. It trades about 0.11 of its potential returns per unit of risk. Eastern Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,230  in Eastern Co on October 4, 2024 and sell it today you would earn a total of  424.00  from holding Eastern Co or generate 19.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Global Partners LP  vs.  Eastern Co

Global Partners LP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Global Partners and Eastern

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

The idea behind Global Partners LP and Eastern Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..