Correlation Between BGF Global and BGF Euro
Can any of the company-specific risk be diversified away by investing in both BGF Global and BGF Euro 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 BGF Global and BGF Euro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Global Allocation and BGF Euro Markets, you can compare the effects of market volatilities on BGF Global and BGF Euro 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 BGF Global with a short position of BGF Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Global and BGF Euro.
Diversification Opportunities for BGF Global and BGF Euro
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BGF and BGF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BGF Global Allocation and BGF Euro Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Euro Markets and BGF Global 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 BGF Global Allocation are associated (or correlated) with BGF Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Euro Markets has no effect on the direction of BGF Global i.e., BGF Global and BGF Euro go up and down completely randomly.
Pair Corralation between BGF Global and BGF Euro
Assuming the 90 days trading horizon BGF Global is expected to generate 1.59 times less return on investment than BGF Euro. But when comparing it to its historical volatility, BGF Global Allocation is 1.79 times less risky than BGF Euro. It trades about 0.07 of its potential returns per unit of risk. BGF Euro Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,359 in BGF Euro Markets on September 14, 2024 and sell it today you would earn a total of 168.00 from holding BGF Euro Markets or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.19% |
| Values | Daily Returns |
BGF Global Allocation vs. BGF Euro Markets
Performance |
| Timeline |
| BGF Global Allocation |
| BGF Euro Markets |
BGF Global and BGF Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Global and BGF Euro
The main advantage of trading using opposite BGF Global and BGF Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Global position performs unexpectedly, BGF Euro 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 BGF Euro will offset losses from the drop in BGF Euro's long position.| BGF Global vs. Groupama Entreprises N | BGF Global vs. Renaissance Europe C | BGF Global vs. Superior Plus Corp | BGF Global vs. Origin Agritech |
| BGF Euro vs. Groupama Entreprises N | BGF Euro vs. Renaissance Europe C | BGF Euro vs. Superior Plus Corp | BGF Euro vs. Origin Agritech |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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