Correlation Between Global Net and PS Business

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

Diversification Opportunities for Global Net and PS Business

0.0

Correlation Coefficient

Global Net  PS Business

Pay attention - limited upside

The 3 months correlation between Global and PSBYP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease, and PS Business Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PS Business Parks 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 PS Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PS Business Parks has no effect on the direction of Global Net i.e., Global Net and PS Business go up and down completely randomly.

Pair Corralation between Global Net and PS Business

Considering the 90-day investment horizon Global Net Lease, is expected to under-perform the PS Business. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease, is 1.79 times less risky than PS Business. The stock trades about -0.03 of its potential returns per unit of risk. The PS Business Parks is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,098  in PS Business Parks on October 9, 2024 and sell it today you would earn a total of  302.00  from holding PS Business Parks or generate 27.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.01%
Values	Daily Returns

Global Net Lease,  vs.  PS Business Parks

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. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PS Business Parks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PS Business Parks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PS Business is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global Net and PS Business

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

The idea behind Global Net Lease, and PS Business Parks 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.