Correlation Between Glg Intl and American Funds
Can any of the company-specific risk be diversified away by investing in both Glg Intl and American Funds 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 Glg Intl and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glg Intl Small and American Funds New, you can compare the effects of market volatilities on Glg Intl and American Funds 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 Glg Intl with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and American Funds.
Diversification Opportunities for Glg Intl and American Funds
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glg and American is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New and Glg Intl 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 Glg Intl Small are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Glg Intl i.e., Glg Intl and American Funds go up and down completely randomly.
Pair Corralation between Glg Intl and American Funds
Assuming the 90 days horizon Glg Intl is expected to generate 2.56 times less return on investment than American Funds. In addition to that, Glg Intl is 1.39 times more volatile than American Funds New. It trades about 0.04 of its total potential returns per unit of risk. American Funds New is currently generating about 0.16 per unit of volatility. If you would invest 6,074 in American Funds New on March 12, 2024 and sell it today you would earn a total of 119.00 from holding American Funds New or generate 1.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Glg Intl Small vs. American Funds New
Performance |
Timeline |
Glg Intl Small |
American Funds New |
Glg Intl and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Glg Intl and American Funds
The main advantage of trading using opposite Glg Intl and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.Glg Intl vs. New Perspective Fund | Glg Intl vs. New Perspective Fund | Glg Intl vs. New Perspective Fund | Glg Intl vs. New Perspective Fund |
American Funds vs. American Funds New | American Funds vs. New Perspective Fund | American Funds vs. New Perspective Fund | American Funds vs. New Perspective Fund |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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