Correlation Between SP Global and Dun Bradstreet

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

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

Diversification Opportunities for SP Global and Dun Bradstreet

0.74

Correlation Coefficient

SP Global  Dun Bradstreet

Poor diversification

The 3 months correlation between SPGI and Dun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Dun Bradstreet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dun Bradstreet Holdings and SP Global 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 SP Global are associated (or correlated) with Dun Bradstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dun Bradstreet Holdings has no effect on the direction of SP Global i.e., SP Global and Dun Bradstreet go up and down completely randomly.

Pair Corralation between SP Global and Dun Bradstreet

Given the investment horizon of 90 days SP Global is expected to generate 0.71 times more return on investment than Dun Bradstreet. However, SP Global is 1.41 times less risky than Dun Bradstreet. It trades about 0.04 of its potential returns per unit of risk. Dun Bradstreet Holdings is currently generating about -0.03 per unit of risk. If you would invest  32,397  in SP Global on February 7, 2024 and sell it today you would earn a total of  10,179  from holding SP Global or generate 31.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

SP Global  vs.  Dun Bradstreet Holdings

SP Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Dun Bradstreet Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dun Bradstreet Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dun Bradstreet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SP Global and Dun Bradstreet

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

The idea behind SP Global and Dun Bradstreet Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..