Correlation Between BGF Euro and BGF Global
Can any of the company-specific risk be diversified away by investing in both BGF Euro and BGF Global 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 Euro and BGF Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Euro Markets and BGF Global Allocation, you can compare the effects of market volatilities on BGF Euro and BGF Global 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 Euro with a short position of BGF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Euro and BGF Global.
Diversification Opportunities for BGF Euro and BGF Global
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BGF and BGF is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BGF Euro Markets and BGF Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Global Allocation and BGF Euro 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 Euro Markets are associated (or correlated) with BGF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Global Allocation has no effect on the direction of BGF Euro i.e., BGF Euro and BGF Global go up and down completely randomly.
Pair Corralation between BGF Euro and BGF Global
Assuming the 90 days trading horizon BGF Euro is expected to generate 1.92 times less return on investment than BGF Global. In addition to that, BGF Euro is 1.31 times more volatile than BGF Global Allocation. It trades about 0.03 of its total potential returns per unit of risk. BGF Global Allocation is currently generating about 0.08 per unit of volatility. If you would invest 6,830 in BGF Global Allocation on September 14, 2024 and sell it today you would earn a total of 892.00 from holding BGF Global Allocation or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.06% |
| Values | Daily Returns |
BGF Euro Markets vs. BGF Global Allocation
Performance |
| Timeline |
| BGF Euro Markets |
| BGF Global Allocation |
BGF Euro and BGF Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Euro and BGF Global
The main advantage of trading using opposite BGF Euro and BGF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Euro position performs unexpectedly, BGF Global 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 Global will offset losses from the drop in BGF Global's long position.| BGF Euro vs. BGF Global Allocation | BGF Euro vs. BGF World Gold | BGF Euro vs. BGF Global Allocation | BGF Euro vs. BGF World Gold |
| BGF Global vs. Groupama Entreprises N | BGF Global vs. Renaissance Europe C | BGF Global vs. Superior Plus Corp | BGF Global 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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