Correlation Between Global Net and Heavitree Brewery

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

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

Diversification Opportunities for Global Net and Heavitree Brewery

-0.34

Correlation Coefficient

Global Net  Heavitree Brewery

Very good diversification

The 3 months correlation between Global and Heavitree is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery and Global Net 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 Global Net Lease are associated (or correlated) with Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Global Net i.e., Global Net and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Global Net and Heavitree Brewery

Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Heavitree Brewery. In addition to that, Global Net is 10.15 times more volatile than Heavitree Brewery. It trades about -0.02 of its total potential returns per unit of risk. Heavitree Brewery is currently generating about 0.13 per unit of volatility. If you would invest  21,225  in Heavitree Brewery on April 23, 2025 and sell it today you would earn a total of  275.00  from holding Heavitree Brewery or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Global Net Lease  vs.  Heavitree Brewery

Global Net Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global Net is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Heavitree Brewery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heavitree Brewery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Net and Heavitree Brewery

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

The idea behind Global Net Lease and Heavitree Brewery 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.