Correlation Between Global Net and InfuSystems Holdings

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

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

Diversification Opportunities for Global Net and InfuSystems Holdings

-0.05

Correlation Coefficient

Global Net  InfuSystems Holdings

Good diversification

The 3 months correlation between Global and InfuSystems is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings and Global Net 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 Net Lease are associated (or correlated) with InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of Global Net i.e., Global Net and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between Global Net and InfuSystems Holdings

Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.6 times more return on investment than InfuSystems Holdings. However, Global Net Lease is 1.67 times less risky than InfuSystems Holdings. It trades about 0.03 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about -0.1 per unit of risk. If you would invest  2,277  in Global Net Lease on October 26, 2024 and sell it today you would earn a total of  37.00  from holding Global Net Lease or generate 1.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Global Net Lease  vs.  InfuSystems Holdings

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

InfuSystems Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfuSystems Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, InfuSystems Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Net and InfuSystems Holdings

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

The idea behind Global Net Lease and InfuSystems Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.