Correlation Between Global E and Groupon

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

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

Diversification Opportunities for Global E and Groupon

0.25

Correlation Coefficient

Global E  Groupon

Modest diversification

The 3 months correlation between Global and Groupon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Global E 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 E Online are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Global E i.e., Global E and Groupon go up and down completely randomly.

Pair Corralation between Global E and Groupon

Given the investment horizon of 90 days Global E Online is expected to under-perform the Groupon. But the stock apears to be less risky and, when comparing its historical volatility, Global E Online is 1.88 times less risky than Groupon. The stock trades about 0.0 of its potential returns per unit of risk. The Groupon is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  504.00  in Groupon on February 6, 2024 and sell it today you would earn a total of  616.00  from holding Groupon or generate 122.22% return on investment over 90 days.

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

Global E Online  vs.  Groupon

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers 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.

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Global E and Groupon

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

The idea behind Global E Online and Groupon 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.