Correlation Between International Value and Global Opportunity
Can any of the company-specific risk be diversified away by investing in both International Value and Global Opportunity 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 International Value and Global Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Value Fund and Global Opportunity Portfolio, you can compare the effects of market volatilities on International Value and Global Opportunity 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 International Value with a short position of Global Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Value and Global Opportunity.
Diversification Opportunities for International Value and Global Opportunity
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Global is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Value Fund and Global Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunity and International Value 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 International Value Fund are associated (or correlated) with Global Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunity has no effect on the direction of International Value i.e., International Value and Global Opportunity go up and down completely randomly.
Pair Corralation between International Value and Global Opportunity
Assuming the 90 days horizon International Value Fund is expected to under-perform the Global Opportunity. In addition to that, International Value is 1.29 times more volatile than Global Opportunity Portfolio. It trades about -0.05 of its total potential returns per unit of risk. Global Opportunity Portfolio is currently generating about 0.41 per unit of volatility. If you would invest 3,468 in Global Opportunity Portfolio on September 1, 2024 and sell it today you would earn a total of 206.00 from holding Global Opportunity Portfolio or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Value Fund vs. Global Opportunity Portfolio
Performance |
| Timeline |
| International Value |
| Global Opportunity |
International Value and Global Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Value and Global Opportunity
The main advantage of trading using opposite International Value and Global Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Value position performs unexpectedly, Global Opportunity 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 Global Opportunity will offset losses from the drop in Global Opportunity's long position.| International Value vs. Small Cap Growth | International Value vs. Disciplined Growth Fund | International Value vs. Large Pany Value | International Value vs. Global Small Cap |
| Global Opportunity vs. Emerging Markets Equity | Global Opportunity vs. Global Fixed Income | Global Opportunity vs. Global Fixed Income | Global Opportunity vs. Global Fixed Income |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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