Correlation Between US Global and Themes European

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

By analyzing existing cross correlation between US Global Jets and Themes European Luxury, you can compare the effects of market volatilities on US Global and Themes European 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 US Global with a short position of Themes European. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Themes European.

Diversification Opportunities for US Global and Themes European

-0.33

Correlation Coefficient

US Global  Themes European

Very good diversification

The 3 months correlation between JETS and Themes is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets and Themes European Luxury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes European Luxury and US Global 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 US Global Jets are associated (or correlated) with Themes European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes European Luxury has no effect on the direction of US Global i.e., US Global and Themes European go up and down completely randomly.

Pair Corralation between US Global and Themes European

Given the investment horizon of 90 days US Global Jets is expected to generate 1.12 times more return on investment than Themes European. However, US Global is 1.12 times more volatile than Themes European Luxury. It trades about 0.04 of its potential returns per unit of risk. Themes European Luxury is currently generating about -0.02 per unit of risk. If you would invest  1,994  in US Global Jets on October 10, 2024 and sell it today you would earn a total of  583.00  from holding US Global Jets or generate 29.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.74%
Values	Daily Returns

US Global Jets  vs.  Themes European Luxury

US Global Jets

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Themes European Luxury

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Themes European Luxury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Themes European is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with US Global and Themes European

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

The idea behind US Global Jets and Themes European Luxury 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.