Correlation Between Global Partners and HAVN Life

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

Diversification Opportunities for Global Partners and HAVN Life

0.09

Correlation Coefficient

Global Partners  HAVN Life

Significant diversification

The 3 months correlation between Global and HAVN is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and HAVN Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVN Life Sciences 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 HAVN Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVN Life Sciences has no effect on the direction of Global Partners i.e., Global Partners and HAVN Life go up and down completely randomly.

Pair Corralation between Global Partners and HAVN Life

Assuming the 90 days trading horizon Global Partners LP is expected to under-perform the HAVN Life. But the stock apears to be less risky and, when comparing its historical volatility, Global Partners LP is 421.37 times less risky than HAVN Life. The stock trades about -0.02 of its potential returns per unit of risk. The HAVN Life Sciences is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.10  in HAVN Life Sciences on December 26, 2024 and sell it today you would lose (0.05) from holding HAVN Life Sciences or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Global Partners LP  vs.  HAVN Life Sciences

Global Partners LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

HAVN Life Sciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAVN Life Sciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, HAVN Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Partners and HAVN Life

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

The idea behind Global Partners LP and HAVN Life Sciences 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.