Correlation Between Global Opportunity and Commonwealth Japan
Can any of the company-specific risk be diversified away by investing in both Global Opportunity and Commonwealth Japan 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 Global Opportunity and Commonwealth Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Opportunity Portfolio and Commonwealth Japan Fund, you can compare the effects of market volatilities on Global Opportunity and Commonwealth Japan 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 Global Opportunity with a short position of Commonwealth Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Opportunity and Commonwealth Japan.
Diversification Opportunities for Global Opportunity and Commonwealth Japan
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and COMMONWEALTH is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunity Portfolio and Commonwealth Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Japan and Global Opportunity 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 Global Opportunity Portfolio are associated (or correlated) with Commonwealth Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Japan has no effect on the direction of Global Opportunity i.e., Global Opportunity and Commonwealth Japan go up and down completely randomly.
Pair Corralation between Global Opportunity and Commonwealth Japan
Assuming the 90 days horizon Global Opportunity Portfolio is expected to generate 1.12 times more return on investment than Commonwealth Japan. However, Global Opportunity is 1.12 times more volatile than Commonwealth Japan Fund. It trades about 0.05 of its potential returns per unit of risk. Commonwealth Japan Fund is currently generating about 0.02 per unit of risk. If you would invest 2,333 in Global Opportunity Portfolio on January 20, 2025 and sell it today you would earn a total of 792.00 from holding Global Opportunity Portfolio or generate 33.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Opportunity Portfolio vs. Commonwealth Japan Fund
Performance |
| Timeline |
| Global Opportunity |
| Commonwealth Japan |
Global Opportunity and Commonwealth Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Opportunity and Commonwealth Japan
The main advantage of trading using opposite Global Opportunity and Commonwealth Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Opportunity position performs unexpectedly, Commonwealth Japan 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 Commonwealth Japan will offset losses from the drop in Commonwealth Japan's long position.| Global Opportunity vs. Fidelity Sai Convertible | Global Opportunity vs. Calamos Dynamic Convertible | Global Opportunity vs. Virtus Convertible | Global Opportunity vs. Gabelli Convertible And |
| Commonwealth Japan vs. Commonwealth Australianew Zealand | Commonwealth Japan vs. Lazard Emerging Markets | Commonwealth Japan vs. ATLANTIC PETROLPF DK | Commonwealth Japan vs. Ashmore Emerging Markets |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |