Correlation Between Global Payments and Canna Consumer

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

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

Diversification Opportunities for Global Payments and Canna Consumer

0.82

Correlation Coefficient

Global Payments  Canna Consumer

Very poor diversification

The 3 months correlation between Global and Canna is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Canna Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canna Consumer Goods and Global Payments 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 Payments are associated (or correlated) with Canna Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canna Consumer Goods has no effect on the direction of Global Payments i.e., Global Payments and Canna Consumer go up and down completely randomly.

Pair Corralation between Global Payments and Canna Consumer

Considering the 90-day investment horizon Global Payments is expected to generate 0.15 times more return on investment than Canna Consumer. However, Global Payments is 6.74 times less risky than Canna Consumer. It trades about -0.18 of its potential returns per unit of risk. Canna Consumer Goods is currently generating about -0.04 per unit of risk. If you would invest  11,303  in Global Payments on December 5, 2024 and sell it today you would lose (1,349) from holding Global Payments or give up 11.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Global Payments  vs.  Canna Consumer Goods

Global Payments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Payments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Canna Consumer Goods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canna Consumer Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Global Payments and Canna Consumer

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

The idea behind Global Payments and Canna Consumer Goods 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.