Correlation Between Metropolitan West and Glg Intl
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Glg Intl 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 Metropolitan West and Glg Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Glg Intl Small, you can compare the effects of market volatilities on Metropolitan West and Glg Intl 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 Metropolitan West with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Glg Intl.
Diversification Opportunities for Metropolitan West and Glg Intl
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and Glg is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Glg Intl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glg Intl Small and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Glg Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glg Intl Small has no effect on the direction of Metropolitan West i.e., Metropolitan West and Glg Intl go up and down completely randomly.
Pair Corralation between Metropolitan West and Glg Intl
Assuming the 90 days horizon Metropolitan West is expected to generate 12.96 times less return on investment than Glg Intl. But when comparing it to its historical volatility, Metropolitan West High is 10.46 times less risky than Glg Intl. It trades about 0.18 of its potential returns per unit of risk. Glg Intl Small is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,426 in Glg Intl Small on September 13, 2024 and sell it today you would earn a total of 351.00 from holding Glg Intl Small or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Glg Intl Small
Performance |
| Timeline |
| Metropolitan West High |
| Glg Intl Small |
Metropolitan West and Glg Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Glg Intl
The main advantage of trading using opposite Metropolitan West and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Glg Intl 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 Glg Intl will offset losses from the drop in Glg Intl's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Glg Intl vs. Oppenheimer Main Street | Glg Intl vs. Oppenheimer Intl Small | Glg Intl vs. Oppenheimer Main Street | Glg Intl vs. Oppenheimer Global Strtgc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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