Correlation Between Global Infrastructure and International Developed
Can any of the company-specific risk be diversified away by investing in both Global Infrastructure and International Developed 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 Infrastructure and International Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Infrastructure Fund and International Developed Markets, you can compare the effects of market volatilities on Global Infrastructure and International Developed 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 Infrastructure with a short position of International Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Infrastructure and International Developed.
Diversification Opportunities for Global Infrastructure and International Developed
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between GLOBAL and International is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Global Infrastructure Fund and International Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Developed and Global Infrastructure 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 Infrastructure Fund are associated (or correlated) with International Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Developed has no effect on the direction of Global Infrastructure i.e., Global Infrastructure and International Developed go up and down completely randomly.
Pair Corralation between Global Infrastructure and International Developed
Assuming the 90 days horizon Global Infrastructure Fund is expected to generate 0.85 times more return on investment than International Developed. However, Global Infrastructure Fund is 1.18 times less risky than International Developed. It trades about 0.25 of its potential returns per unit of risk. International Developed Markets is currently generating about 0.02 per unit of risk. If you would invest 955.00 in Global Infrastructure Fund on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Global Infrastructure Fund or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Infrastructure Fund vs. International Developed Market
Performance |
| Timeline |
| Global Infrastructure |
| International Developed |
Global Infrastructure and International Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Infrastructure and International Developed
The main advantage of trading using opposite Global Infrastructure and International Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Infrastructure position performs unexpectedly, International Developed 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 International Developed will offset losses from the drop in International Developed's long position.| Global Infrastructure vs. International Developed Markets | Global Infrastructure vs. Global Real Estate | Global Infrastructure vs. Global Real Estate | Global Infrastructure vs. Global Real Estate |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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