Correlation Between Global Blue and Teradata Corp

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

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

Diversification Opportunities for Global Blue and Teradata Corp

-0.6

Correlation Coefficient

Global Blue  Teradata Corp

Excellent diversification

The 3 months correlation between Global and Teradata is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Global Blue 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 Blue Group are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Global Blue i.e., Global Blue and Teradata Corp go up and down completely randomly.

Pair Corralation between Global Blue and Teradata Corp

Allowing for the 90-day total investment horizon Global Blue Group is expected to under-perform the Teradata Corp. In addition to that, Global Blue is 2.2 times more volatile than Teradata Corp. It trades about -0.07 of its total potential returns per unit of risk. Teradata Corp is currently generating about -0.11 per unit of volatility. If you would invest  3,844  in Teradata Corp on February 3, 2024 and sell it today you would lose (118.00) from holding Teradata Corp or give up 3.07% of portfolio value over 90 days.

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

Global Blue Group  vs.  Teradata Corp

Global Blue Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Teradata Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Global Blue and Teradata Corp

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

The idea behind Global Blue Group and Teradata Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.