Correlation Between Smallcap Fund and Glg Intl
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund 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 Smallcap Fund and Glg Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Glg Intl Small, you can compare the effects of market volatilities on Smallcap Fund 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 Smallcap Fund with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Glg Intl.
Diversification Opportunities for Smallcap Fund and Glg Intl
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Smallcap and Glg is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka 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 Smallcap Fund 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 Smallcap Fund Fka 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 Smallcap Fund i.e., Smallcap Fund and Glg Intl go up and down completely randomly.
Pair Corralation between Smallcap Fund and Glg Intl
Assuming the 90 days horizon Smallcap Fund is expected to generate 3.23 times less return on investment than Glg Intl. In addition to that, Smallcap Fund is 1.14 times more volatile than Glg Intl Small. It trades about 0.02 of its total potential returns per unit of risk. Glg Intl Small is currently generating about 0.08 per unit of volatility. If you would invest 5,870 in Glg Intl Small on November 2, 2024 and sell it today you would earn a total of 3,054 from holding Glg Intl Small or generate 52.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Glg Intl Small
Performance |
| Timeline |
| Smallcap Fund Fka |
| Glg Intl Small |
Smallcap Fund and Glg Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Glg Intl
The main advantage of trading using opposite Smallcap Fund and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund 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.| Smallcap Fund vs. Vanguard Small Cap Index | Smallcap Fund vs. Vanguard Small Cap Index | Smallcap Fund vs. Vanguard Small Cap Index | Smallcap Fund vs. Vanguard Small Cap Index |
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 CEOs Directory module to screen CEOs from public companies around the world.
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