Correlation Between Global Core and Asia Opportunity
Can any of the company-specific risk be diversified away by investing in both Global Core and Asia 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 Global Core and Asia Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Portfolio and Asia Opportunity Portfolio, you can compare the effects of market volatilities on Global Core and Asia 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 Global Core with a short position of Asia Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Asia Opportunity.
Diversification Opportunities for Global Core and Asia Opportunity
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Asia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Asia Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Opportunity Por and Global Core 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 E Portfolio are associated (or correlated) with Asia Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Opportunity Por has no effect on the direction of Global Core i.e., Global Core and Asia Opportunity go up and down completely randomly.
Pair Corralation between Global Core and Asia Opportunity
Assuming the 90 days horizon Global E Portfolio is expected to generate 0.72 times more return on investment than Asia Opportunity. However, Global E Portfolio is 1.39 times less risky than Asia Opportunity. It trades about 0.09 of its potential returns per unit of risk. Asia Opportunity Portfolio is currently generating about 0.01 per unit of risk. If you would invest 1,423 in Global E Portfolio on August 31, 2024 and sell it today you would earn a total of 615.00 from holding Global E Portfolio or generate 43.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Portfolio vs. Asia Opportunity Portfolio
Performance |
| Timeline |
| Global E Portfolio |
| Asia Opportunity Por |
Global Core and Asia Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Core and Asia Opportunity
The main advantage of trading using opposite Global Core and Asia Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core position performs unexpectedly, Asia 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 Asia Opportunity will offset losses from the drop in Asia Opportunity's long position.| Global Core vs. Us Vector Equity | Global Core vs. Ms Global Fixed | Global Core vs. Small Cap Equity | Global Core vs. The Gabelli Equity |
| Asia Opportunity vs. Western Asset Diversified | Asia Opportunity vs. American Century Diversified | Asia Opportunity vs. Principal Lifetime Hybrid | Asia Opportunity vs. Harbor Diversified International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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