Correlation Between Glg Intl and Aquila Three

Can any of the company-specific risk be diversified away by investing in both Glg Intl and Aquila Three 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 Aquila Three 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 Aquila Three Peaks, you can compare the effects of market volatilities on Glg Intl and Aquila Three 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 Aquila Three. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Aquila Three.

Diversification Opportunities for Glg Intl and Aquila Three

0.32

Correlation Coefficient

Glg Intl  Aquila Three

Weak diversification

The 3 months correlation between Glg and Aquila is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Aquila Three Peaks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Three Peaks 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 Aquila Three. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquila Three Peaks has no effect on the direction of Glg Intl i.e., Glg Intl and Aquila Three go up and down completely randomly.

Pair Corralation between Glg Intl and Aquila Three

Assuming the 90 days horizon Glg Intl Small is expected to generate 0.35 times more return on investment than Aquila Three. However, Glg Intl Small is 2.82 times less risky than Aquila Three. It trades about 0.17 of its potential returns per unit of risk. Aquila Three Peaks is currently generating about -0.06 per unit of risk. If you would invest  7,960  in Glg Intl Small on September 13, 2024 and sell it today you would earn a total of  817.00  from holding Glg Intl Small or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Glg Intl Small  vs.  Aquila Three Peaks

Glg Intl Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Glg Intl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aquila Three Peaks

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Glg Intl and Aquila Three

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

The idea behind Glg Intl Small and Aquila Three Peaks 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.