Correlation Between Global Payments and Citrine Global

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

By analyzing existing cross correlation between Global Payments and Citrine Global Corp, you can compare the effects of market volatilities on Global Payments and Citrine Global 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 Citrine Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Payments and Citrine Global.

Diversification Opportunities for Global Payments and Citrine Global

-0.56

Correlation Coefficient

Global Payments  Citrine Global

Excellent diversification

The 3 months correlation between Global and Citrine is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Citrine Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citrine Global Corp 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 Citrine Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citrine Global Corp has no effect on the direction of Global Payments i.e., Global Payments and Citrine Global go up and down completely randomly.

Pair Corralation between Global Payments and Citrine Global

Considering the 90-day investment horizon Global Payments is expected to generate 0.26 times more return on investment than Citrine Global. However, Global Payments is 3.79 times less risky than Citrine Global. It trades about 0.05 of its potential returns per unit of risk. Citrine Global Corp is currently generating about -0.18 per unit of risk. If you would invest  11,044  in Global Payments on September 13, 2024 and sell it today you would earn a total of  663.00  from holding Global Payments or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Global Payments  vs.  Citrine Global Corp

Global Payments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Global Payments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citrine Global Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citrine Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Global Payments and Citrine Global

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

The idea behind Global Payments and Citrine Global Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.