Correlation Between Global Payments and Wildpack Beverage

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

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

Diversification Opportunities for Global Payments and Wildpack Beverage

0.83

Correlation Coefficient

Global Payments  Wildpack Beverage

Very poor diversification

The 3 months correlation between Global and Wildpack is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Wildpack Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wildpack Beverage 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 Wildpack Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wildpack Beverage has no effect on the direction of Global Payments i.e., Global Payments and Wildpack Beverage go up and down completely randomly.

Pair Corralation between Global Payments and Wildpack Beverage

Considering the 90-day investment horizon Global Payments is expected to generate 0.34 times more return on investment than Wildpack Beverage. However, Global Payments is 2.91 times less risky than Wildpack Beverage. It trades about -0.11 of its potential returns per unit of risk. Wildpack Beverage is currently generating about -0.13 per unit of risk. If you would invest  11,053  in Global Payments on December 29, 2024 and sell it today you would lose (1,301) from holding Global Payments or give up 11.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.31%
Values	Daily Returns

Global Payments  vs.  Wildpack Beverage

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Wildpack Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wildpack Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Global Payments and Wildpack Beverage

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

The idea behind Global Payments and Wildpack Beverage 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.