Correlation Between Sherborne Investors and Global Net

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

By analyzing existing cross correlation between Sherborne Investors Guernsey and Global Net Lease, you can compare the effects of market volatilities on Sherborne Investors and Global Net 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 Sherborne Investors with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherborne Investors and Global Net.

Diversification Opportunities for Sherborne Investors and Global Net

-0.56

Correlation Coefficient

Sherborne Investors  Global Net

Excellent diversification

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

Pair Corralation between Sherborne Investors and Global Net

Assuming the 90 days trading horizon Sherborne Investors Guernsey is expected to under-perform the Global Net. But the stock apears to be less risky and, when comparing its historical volatility, Sherborne Investors Guernsey is 1.53 times less risky than Global Net. The stock trades about -0.15 of its potential returns per unit of risk. The Global Net Lease is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  716.00  in Global Net Lease on November 29, 2024 and sell it today you would earn a total of  20.00  from holding Global Net Lease or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Sherborne Investors Guernsey  vs.  Global Net Lease

Sherborne Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sherborne Investors Guernsey 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Global Net Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Global Net is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sherborne Investors and Global Net

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

The idea behind Sherborne Investors Guernsey and Global Net Lease 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.