Correlation Between R Co and BGF Global

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

By analyzing existing cross correlation between R co Thematic Silver and BGF Global Allocation, you can compare the effects of market volatilities on R Co and BGF Global 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 R Co with a short position of BGF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of R Co and BGF Global.

Diversification Opportunities for R Co and BGF Global

-0.64

Correlation Coefficient

R Co  BGF Global

Excellent diversification

The 3 months correlation between 0P0000PPEZ and BGF is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding R co Thematic Silver and BGF Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Global Allocation and R Co 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 R co Thematic Silver are associated (or correlated) with BGF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Global Allocation has no effect on the direction of R Co i.e., R Co and BGF Global go up and down completely randomly.

Pair Corralation between R Co and BGF Global

Assuming the 90 days trading horizon R Co is expected to generate 1.89 times less return on investment than BGF Global. But when comparing it to its historical volatility, R co Thematic Silver is 1.01 times less risky than BGF Global. It trades about 0.04 of its potential returns per unit of risk. BGF Global Allocation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,864  in BGF Global Allocation on September 22, 2024 and sell it today you would earn a total of  689.00  from holding BGF Global Allocation or generate 10.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	42.29%
Values	Daily Returns

R co Thematic Silver  vs.  BGF Global Allocation

R co Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days R co Thematic Silver has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable basic indicators, R Co is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BGF Global Allocation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Global Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, BGF Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with R Co and BGF Global

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

The idea behind R co Thematic Silver and BGF Global Allocation 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.