Correlation Between Global Net and Firm Capital

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

Diversification Opportunities for Global Net and Firm Capital

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Global and Firm is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease, and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property 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 Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of Global Net i.e., Global Net and Firm Capital go up and down completely randomly.

Pair Corralation between Global Net and Firm Capital

Considering the 90-day investment horizon Global Net Lease, is expected to under-perform the Firm Capital. In addition to that, Global Net is 1.43 times more volatile than Firm Capital Property. It trades about -0.21 of its total potential returns per unit of risk. Firm Capital Property is currently generating about -0.05 per unit of volatility. If you would invest  417.00  in Firm Capital Property on September 6, 2024 and sell it today you would lose (5.00) from holding Firm Capital Property or give up 1.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Global Net Lease,  vs.  Firm Capital Property

 Performance 
       Timeline  
Global Net Lease, 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global Net Lease, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Firm Capital Property 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Property are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Firm Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Net and Firm Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Net and Firm Capital

The main advantage of trading using opposite Global Net and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.
The idea behind Global Net Lease, and Firm Capital Property 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.
Check out your portfolio center.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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