Correlation Between Materials Portfolio and Glg Intl

Can any of the company-specific risk be diversified away by investing in both Materials Portfolio 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 Materials Portfolio and Glg Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Materials Portfolio Fidelity and Glg Intl Small, you can compare the effects of market volatilities on Materials Portfolio 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 Materials Portfolio with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Portfolio and Glg Intl.

Diversification Opportunities for Materials Portfolio and Glg Intl

-0.22

Correlation Coefficient

Materials Portfolio  Glg Intl

Very good diversification

The 3 months correlation between Materials and Glg is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity 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 Materials Portfolio 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 Materials Portfolio Fidelity 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 Materials Portfolio i.e., Materials Portfolio and Glg Intl go up and down completely randomly.

Pair Corralation between Materials Portfolio and Glg Intl

Assuming the 90 days horizon Materials Portfolio Fidelity is expected to under-perform the Glg Intl. But the mutual fund apears to be less risky and, when comparing its historical volatility, Materials Portfolio Fidelity is 1.06 times less risky than Glg Intl. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Glg Intl Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,201  in Glg Intl Small on September 24, 2024 and sell it today you would earn a total of  204.00  from holding Glg Intl Small or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Materials Portfolio Fidelity  vs.  Glg Intl Small

Materials Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Portfolio Fidelity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Glg Intl Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Glg Intl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Materials Portfolio and Glg Intl

The main advantage of trading using opposite Materials Portfolio and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Portfolio 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.

The idea behind Materials Portfolio Fidelity and Glg Intl Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.