Correlation Between International Consolidated and Global Payments

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

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

Diversification Opportunities for International Consolidated and Global Payments

-0.3

Correlation Coefficient

International Consolidated  Global Payments

Very good diversification

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

Pair Corralation between International Consolidated and Global Payments

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 134.93 times more return on investment than Global Payments. However, International Consolidated is 134.93 times more volatile than Global Payments. It trades about 0.24 of its potential returns per unit of risk. Global Payments is currently generating about 0.07 per unit of risk. If you would invest  40.00  in International Consolidated Companies on September 5, 2024 and sell it today you would lose (38.99) from holding International Consolidated Companies or give up 97.47% of portfolio value over 90 days.

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

International Consolidated Com  vs.  Global Payments

International Consolidated

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global Payments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 5 (%) 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.

Pair Trading with International Consolidated and Global Payments

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

The idea behind International Consolidated Companies and Global Payments 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.