Correlation Between Advantage Portfolio and Global E

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

By analyzing existing cross correlation between Advantage Portfolio Class and Global E Portfolio, you can compare the effects of market volatilities on Advantage Portfolio and Global E 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 Advantage Portfolio with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Portfolio and Global E.

Diversification Opportunities for Advantage Portfolio and Global E

0.89

Correlation Coefficient

Advantage Portfolio  Global E

Very poor diversification

The 3 months correlation between Advantage and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Portfolio Class and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Advantage 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 Advantage Portfolio Class are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Advantage Portfolio i.e., Advantage Portfolio and Global E go up and down completely randomly.

Pair Corralation between Advantage Portfolio and Global E

Assuming the 90 days horizon Advantage Portfolio Class is expected to generate 2.51 times more return on investment than Global E. However, Advantage Portfolio is 2.51 times more volatile than Global E Portfolio. It trades about 0.39 of its potential returns per unit of risk. Global E Portfolio is currently generating about 0.09 per unit of risk. If you would invest  1,966  in Advantage Portfolio Class on September 12, 2024 and sell it today you would earn a total of  197.00  from holding Advantage Portfolio Class or generate 10.02% return on investment over 90 days.

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

Advantage Portfolio Class  vs.  Global E Portfolio

Advantage Portfolio Class

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Portfolio Class are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Advantage Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Global E Portfolio

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Portfolio are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Global E may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Advantage Portfolio and Global E

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

The idea behind Advantage Portfolio Class and Global E Portfolio 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.