Correlation Between Gdl Closed and European Equity

Can any of the company-specific risk be diversified away by investing in both Gdl Closed and European Equity 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 Gdl Closed and European Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gdl Closed Fund and European Equity Closed, you can compare the effects of market volatilities on Gdl Closed and European Equity 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 Gdl Closed with a short position of European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gdl Closed and European Equity.

Diversification Opportunities for Gdl Closed and European Equity

-0.16

Correlation Coefficient

Gdl Closed  European Equity

Good diversification

The 3 months correlation between Gdl and European is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gdl Closed Fund and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed and Gdl Closed 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 Gdl Closed Fund are associated (or correlated) with European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of Gdl Closed i.e., Gdl Closed and European Equity go up and down completely randomly.

Pair Corralation between Gdl Closed and European Equity

Considering the 90-day investment horizon Gdl Closed Fund is expected to generate 0.51 times more return on investment than European Equity. However, Gdl Closed Fund is 1.96 times less risky than European Equity. It trades about 0.06 of its potential returns per unit of risk. European Equity Closed is currently generating about -0.08 per unit of risk. If you would invest  794.00  in Gdl Closed Fund on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Gdl Closed Fund or generate 1.76% return on investment over 90 days.

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

Gdl Closed Fund  vs.  European Equity Closed

Gdl Closed Fund

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gdl Closed Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent fundamental indicators, Gdl Closed is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, European Equity is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gdl Closed and European Equity

The main advantage of trading using opposite Gdl Closed and European Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gdl Closed position performs unexpectedly, European Equity 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 European Equity will offset losses from the drop in European Equity's long position.

The idea behind Gdl Closed Fund and European Equity Closed 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.