Correlation Between Worldwide Asset and GXC

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

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

Diversification Opportunities for Worldwide Asset and GXC

0.0

Correlation Coefficient

Worldwide Asset  GXC

Pay attention - limited upside

The 3 months correlation between Worldwide and GXC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Asset eXchange and GXC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXC and Worldwide Asset 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 Worldwide Asset eXchange are associated (or correlated) with GXC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GXC has no effect on the direction of Worldwide Asset i.e., Worldwide Asset and GXC go up and down completely randomly.

Pair Corralation between Worldwide Asset and GXC

If you would invest  30.00  in GXC on September 25, 2024 and sell it today you would earn a total of  0.00  from holding GXC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Worldwide Asset eXchange  vs.  GXC

Worldwide Asset eXchange

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Worldwide Asset eXchange are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Worldwide Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

GXC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Worldwide Asset and GXC

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

The idea behind Worldwide Asset eXchange and GXC 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 Global Correlations module to find global opportunities by holding instruments from different markets.