Correlation Between FF Global and BGF Global
Can any of the company-specific risk be diversified away by investing in both FF Global and BGF Global 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 FF Global and BGF Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FF Global and BGF Global Allocation, you can compare the effects of market volatilities on FF Global and BGF Global 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 FF Global with a short position of BGF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of FF Global and BGF Global.
Diversification Opportunities for FF Global and BGF Global
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FJ2P and BGF is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FF Global and BGF Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Global Allocation and FF 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 FF Global are associated (or correlated) with BGF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Global Allocation has no effect on the direction of FF Global i.e., FF Global and BGF Global go up and down completely randomly.
Pair Corralation between FF Global and BGF Global
Assuming the 90 days trading horizon FF Global is expected to generate 1.54 times more return on investment than BGF Global. However, FF Global is 1.54 times more volatile than BGF Global Allocation. It trades about 0.27 of its potential returns per unit of risk. BGF Global Allocation is currently generating about 0.2 per unit of risk. If you would invest 7,122 in FF Global on September 12, 2024 and sell it today you would earn a total of 348.00 from holding FF Global or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FF Global vs. BGF Global Allocation
Performance |
| Timeline |
| FF Global |
| BGF Global Allocation |
FF Global and BGF Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FF Global and BGF Global
The main advantage of trading using opposite FF Global and BGF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FF Global position performs unexpectedly, BGF Global 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 BGF Global will offset losses from the drop in BGF Global's long position.| FF Global vs. Groupama Entreprises N | FF Global vs. Renaissance Europe C | FF Global vs. Superior Plus Corp | FF Global vs. Origin Agritech |
| BGF Global vs. Groupama Entreprises N | BGF Global vs. Renaissance Europe C | BGF Global vs. Superior Plus Corp | BGF Global vs. Origin Agritech |
Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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