Correlation Between Global Net and 12511VAA6

Can any of the company-specific risk be diversified away by investing in both Global Net and 12511VAA6 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 12511VAA6 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 CHDN 575 01 APR 30, you can compare the effects of market volatilities on Global Net and 12511VAA6 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 12511VAA6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and 12511VAA6.

Diversification Opportunities for Global Net and 12511VAA6

-0.05

Correlation Coefficient

Global Net  12511VAA6

Good diversification

The 3 months correlation between Global and 12511VAA6 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and CHDN 575 01 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHDN 575 01 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 12511VAA6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHDN 575 01 has no effect on the direction of Global Net i.e., Global Net and 12511VAA6 go up and down completely randomly.

Pair Corralation between Global Net and 12511VAA6

Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.85 times more return on investment than 12511VAA6. However, Global Net Lease is 1.18 times less risky than 12511VAA6. It trades about 0.04 of its potential returns per unit of risk. CHDN 575 01 APR 30 is currently generating about -0.08 per unit of risk. If you would invest  2,253  in Global Net Lease on December 25, 2024 and sell it today you would earn a total of  49.00  from holding Global Net Lease or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Global Net Lease  vs.  CHDN 575 01 APR 30

Global Net Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CHDN 575 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHDN 575 01 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CHDN 575 01 APR 30 investors.

Pair Trading with Global Net and 12511VAA6

The main advantage of trading using opposite Global Net and 12511VAA6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, 12511VAA6 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 12511VAA6 will offset losses from the drop in 12511VAA6's long position.

The idea behind Global Net Lease and CHDN 575 01 APR 30 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.