Correlation Between American Funds and Glg Intl
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Glg Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2040 and Glg Intl Small, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Glg Intl.
Diversification Opportunities for American Funds and Glg Intl
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Glg is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2040 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 American Funds 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 American Funds 2040 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 American Funds i.e., American Funds and Glg Intl go up and down completely randomly.
Pair Corralation between American Funds and Glg Intl
Assuming the 90 days horizon American Funds 2040 is expected to under-perform the Glg Intl. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds 2040 is 1.11 times less risky than Glg Intl. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Glg Intl Small is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8,485 in Glg Intl Small on October 24, 2024 and sell it today you would earn a total of 199.00 from holding Glg Intl Small or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2040 vs. Glg Intl Small
Performance |
| Timeline |
| American Funds 2040 |
| Glg Intl Small |
American Funds and Glg Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Glg Intl
The main advantage of trading using opposite American Funds and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Glg Intl Small | American Funds vs. Small Pany Growth | American Funds vs. Sp Smallcap 600 | American Funds vs. Qs Defensive Growth |
| Glg Intl vs. Ab Bond Inflation | Glg Intl vs. Asg Managed Futures | Glg Intl vs. Atac Inflation Rotation | Glg Intl vs. Ab Bond Inflation |
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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