Correlation Between Glg Intl and Madison Core
Can any of the company-specific risk be diversified away by investing in both Glg Intl and Madison Core 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 Madison Core 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 Madison E Bond, you can compare the effects of market volatilities on Glg Intl and Madison Core 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 Madison Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Madison Core.
Diversification Opportunities for Glg Intl and Madison Core
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Glg and Madison is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond 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 Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Glg Intl i.e., Glg Intl and Madison Core go up and down completely randomly.
Pair Corralation between Glg Intl and Madison Core
Assuming the 90 days horizon Glg Intl Small is expected to generate 2.87 times more return on investment than Madison Core. However, Glg Intl is 2.87 times more volatile than Madison E Bond. It trades about 0.07 of its potential returns per unit of risk. Madison E Bond is currently generating about 0.03 per unit of risk. If you would invest 5,887 in Glg Intl Small on December 12, 2024 and sell it today you would earn a total of 2,197 from holding Glg Intl Small or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glg Intl Small vs. Madison E Bond
Performance |
| Timeline |
| Glg Intl Small |
| Madison E Bond |
Glg Intl and Madison Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glg Intl and Madison Core
The main advantage of trading using opposite Glg Intl and Madison Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, Madison Core 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 Madison Core will offset losses from the drop in Madison Core's long position.| Glg Intl vs. Harbor Diversified International | ||
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| Madison Core vs. Goldman Sachs International |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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