Correlation Between GTL and ITETF
Can any of the company-specific risk be diversified away by investing in both GTL and ITETF 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 GTL and ITETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and ITETF, you can compare the effects of market volatilities on GTL and ITETF 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 GTL with a short position of ITETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and ITETF.
Diversification Opportunities for GTL and ITETF
Average diversification
The 3 months correlation between GTL and ITETF is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited and ITETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITETF and GTL 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 GTL Limited are associated (or correlated) with ITETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITETF has no effect on the direction of GTL i.e., GTL and ITETF go up and down completely randomly.
Pair Corralation between GTL and ITETF
Assuming the 90 days trading horizon GTL Limited is expected to under-perform the ITETF. In addition to that, GTL is 1.92 times more volatile than ITETF. It trades about -0.01 of its total potential returns per unit of risk. ITETF is currently generating about 0.22 per unit of volatility. If you would invest 4,142 in ITETF on September 2, 2024 and sell it today you would earn a total of 274.00 from holding ITETF or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GTL Limited vs. ITETF
Performance |
| Timeline |
| GTL Limited |
| ITETF |
GTL and ITETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GTL and ITETF
The main advantage of trading using opposite GTL and ITETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL position performs unexpectedly, ITETF 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 ITETF will offset losses from the drop in ITETF's long position.| GTL vs. One 97 Communications | GTL vs. Paramount Communications Limited | GTL vs. OnMobile Global Limited | GTL vs. Elin Electronics Limited |
| ITETF vs. Kingfa Science Technology | ITETF vs. GTL Limited | ITETF vs. Agro Phos India | ITETF vs. Indo Amines Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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