Correlation Between Glg Intl and Congress Large
Can any of the company-specific risk be diversified away by investing in both Glg Intl and Congress Large 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 Glg Intl and Congress Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glg Intl Small and Congress Large Cap, you can compare the effects of market volatilities on Glg Intl and Congress Large 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 Glg Intl with a short position of Congress Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Congress Large.
Diversification Opportunities for Glg Intl and Congress Large
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Glg and Congress is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Congress Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Large Cap and Glg Intl 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 Glg Intl Small are associated (or correlated) with Congress Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Large Cap has no effect on the direction of Glg Intl i.e., Glg Intl and Congress Large go up and down completely randomly.
Pair Corralation between Glg Intl and Congress Large
Assuming the 90 days horizon Glg Intl is expected to generate 1.75 times less return on investment than Congress Large. But when comparing it to its historical volatility, Glg Intl Small is 1.05 times less risky than Congress Large. It trades about 0.24 of its potential returns per unit of risk. Congress Large Cap is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 4,828 in Congress Large Cap on September 5, 2024 and sell it today you would earn a total of 383.00 from holding Congress Large Cap or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glg Intl Small vs. Congress Large Cap
Performance |
| Timeline |
| Glg Intl Small |
| Congress Large Cap |
Glg Intl and Congress Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glg Intl and Congress Large
The main advantage of trading using opposite Glg Intl and Congress Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, Congress Large 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 Congress Large will offset losses from the drop in Congress Large's long position.| Glg Intl vs. Baron Global Advantage | Glg Intl vs. Columbia Seligman Global | Glg Intl vs. Blackrock Mid Cap | Glg Intl vs. Internet Ultrasector Profund |
| Congress Large vs. Qs Small Capitalization | Congress Large vs. Ab Small Cap | Congress Large vs. Champlain Small | Congress Large vs. Glg Intl Small |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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