Correlation Between Johnson Institutional and Glg Intl

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

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

Diversification Opportunities for Johnson Institutional and Glg Intl

-0.41

Correlation Coefficient

Johnson Institutional  Glg Intl

Very good diversification

The 3 months correlation between Johnson and Glg is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Institutional Intermed 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 Johnson Institutional 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 Johnson Institutional Intermediate 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 Johnson Institutional i.e., Johnson Institutional and Glg Intl go up and down completely randomly.

Pair Corralation between Johnson Institutional and Glg Intl

Assuming the 90 days horizon Johnson Institutional is expected to generate 6.92 times less return on investment than Glg Intl. But when comparing it to its historical volatility, Johnson Institutional Intermediate is 3.67 times less risky than Glg Intl. It trades about 0.06 of its potential returns per unit of risk. Glg Intl Small is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,009  in Glg Intl Small on September 14, 2024 and sell it today you would earn a total of  3,738  from holding Glg Intl Small or generate 74.63% return on investment over 90 days.

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

Johnson Institutional Intermed  vs.  Glg Intl Small

Johnson Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Institutional Intermediate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Johnson Institutional is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Glg Intl Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 12 (%) 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.

Pair Trading with Johnson Institutional and Glg Intl

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

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..