Correlation Between Wilhelmina and Global Payments

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

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

Diversification Opportunities for Wilhelmina and Global Payments

-0.49

Correlation Coefficient

Wilhelmina  Global Payments

Very good diversification

The 3 months correlation between Wilhelmina and Global is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and Wilhelmina 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 Wilhelmina 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 Wilhelmina i.e., Wilhelmina and Global Payments go up and down completely randomly.

Pair Corralation between Wilhelmina and Global Payments

Given the investment horizon of 90 days Wilhelmina is expected to generate 2.7 times more return on investment than Global Payments. However, Wilhelmina is 2.7 times more volatile than Global Payments. It trades about 0.04 of its potential returns per unit of risk. Global Payments is currently generating about 0.1 per unit of risk. If you would invest  341.00  in Wilhelmina on October 25, 2024 and sell it today you would earn a total of  10.00  from holding Wilhelmina or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

Wilhelmina  vs.  Global Payments

Wilhelmina

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wilhelmina are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Wilhelmina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global Payments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 7 (%) 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 February 2025.

Pair Trading with Wilhelmina and Global Payments

The main advantage of trading using opposite Wilhelmina and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilhelmina 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 Wilhelmina 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.