Correlation Between Stagwell and Global E

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

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

Diversification Opportunities for Stagwell and Global E

0.55

Correlation Coefficient

Stagwell  Global E

Very weak diversification

The 3 months correlation between Stagwell and Global is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and Stagwell 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 Stagwell are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Stagwell i.e., Stagwell and Global E go up and down completely randomly.

Pair Corralation between Stagwell and Global E

Given the investment horizon of 90 days Stagwell is expected to generate 8.5 times less return on investment than Global E. But when comparing it to its historical volatility, Stagwell is 1.1 times less risky than Global E. It trades about 0.02 of its potential returns per unit of risk. Global E Online is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,271  in Global E Online on September 23, 2024 and sell it today you would earn a total of  2,207  from holding Global E Online or generate 67.47% return on investment over 90 days.

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

Stagwell  vs.  Global E Online

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Global E Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stagwell and Global E

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

The idea behind Stagwell and Global E Online 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.