Correlation Between Glg Intl and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Glg Intl and Smallcap World 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 Smallcap World 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 Smallcap World Fund, you can compare the effects of market volatilities on Glg Intl and Smallcap World 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 Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Smallcap World.
Diversification Opportunities for Glg Intl and Smallcap World
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Glg and Smallcap is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World 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 Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Glg Intl i.e., Glg Intl and Smallcap World go up and down completely randomly.
Pair Corralation between Glg Intl and Smallcap World
Assuming the 90 days horizon Glg Intl Small is expected to generate 0.98 times more return on investment than Smallcap World. However, Glg Intl Small is 1.02 times less risky than Smallcap World. It trades about 0.36 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.15 per unit of risk. If you would invest 8,346 in Glg Intl Small on November 3, 2024 and sell it today you would earn a total of 565.00 from holding Glg Intl Small or generate 6.77% 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. Smallcap World Fund
Performance |
| Timeline |
| Glg Intl Small |
| Smallcap World |
Glg Intl and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glg Intl and Smallcap World
The main advantage of trading using opposite Glg Intl and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World's long position.| Glg Intl vs. Hunter Small Cap | Glg Intl vs. Ab Small Cap | Glg Intl vs. Df Dent Small | Glg Intl vs. Needham Small Cap |
| Smallcap World vs. Tfa Alphagen Growth | Smallcap World vs. Touchstone Large Cap | Smallcap World vs. Qs Moderate Growth | Smallcap World vs. Tax Managed Large Cap |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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