Correlation Between Glg Intl and Large Cap
Can any of the company-specific risk be diversified away by investing in both Glg Intl and Large Cap 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 Large Cap 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 Large Cap Growth, you can compare the effects of market volatilities on Glg Intl and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Large Cap.
Diversification Opportunities for Glg Intl and Large Cap
Very poor diversification
The 3 months correlation between Glg and Large is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Glg Intl i.e., Glg Intl and Large Cap go up and down completely randomly.
Pair Corralation between Glg Intl and Large Cap
Assuming the 90 days horizon Glg Intl Small is expected to generate 1.02 times more return on investment than Large Cap. However, Glg Intl is 1.02 times more volatile than Large Cap Growth. It trades about 0.09 of its potential returns per unit of risk. Large Cap Growth is currently generating about 0.06 per unit of risk. If you would invest 5,188 in Glg Intl Small on August 24, 2024 and sell it today you would earn a total of 3,036 from holding Glg Intl Small or generate 58.52% 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. Large Cap Growth
Performance |
| Timeline |
| Glg Intl Small |
| Large Cap Growth |
Glg Intl and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glg Intl and Large Cap
The main advantage of trading using opposite Glg Intl and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Glg Intl vs. American Century High | Glg Intl vs. Multi Manager High Yield | Glg Intl vs. Artisan High Income | Glg Intl vs. Virtus High Yield |
| Large Cap vs. Nationwide Small Cap | Large Cap vs. Champlain Small | Large Cap vs. Glg Intl Small | Large Cap vs. The Hartford 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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