Correlation Between I3 Verticals and Global Blue

Can any of the company-specific risk be diversified away by investing in both I3 Verticals and Global Blue 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 I3 Verticals and Global Blue into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between i3 Verticals and Global Blue Group, you can compare the effects of market volatilities on I3 Verticals and Global Blue 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 I3 Verticals with a short position of Global Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of I3 Verticals and Global Blue.

Diversification Opportunities for I3 Verticals and Global Blue

0.3

Correlation Coefficient

I3 Verticals  Global Blue

Weak diversification

The 3 months correlation between IIIV and Global is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding i3 Verticals and Global Blue Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blue Group and I3 Verticals 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 i3 Verticals are associated (or correlated) with Global Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blue Group has no effect on the direction of I3 Verticals i.e., I3 Verticals and Global Blue go up and down completely randomly.

Pair Corralation between I3 Verticals and Global Blue

Given the investment horizon of 90 days i3 Verticals is expected to generate 0.68 times more return on investment than Global Blue. However, i3 Verticals is 1.47 times less risky than Global Blue. It trades about 0.06 of its potential returns per unit of risk. Global Blue Group is currently generating about 0.03 per unit of risk. If you would invest  2,175  in i3 Verticals on September 12, 2024 and sell it today you would earn a total of  160.00  from holding i3 Verticals or generate 7.36% return on investment over 90 days.

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

i3 Verticals  vs.  Global Blue Group

i3 Verticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in i3 Verticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, I3 Verticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Blue Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Global Blue may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with I3 Verticals and Global Blue

The main advantage of trading using opposite I3 Verticals and Global Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I3 Verticals position performs unexpectedly, Global Blue 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 Global Blue will offset losses from the drop in Global Blue's long position.

The idea behind i3 Verticals and Global Blue Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.