Correlation Between Azvalor Global and BGF Global

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

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

Diversification Opportunities for Azvalor Global and BGF Global

-0.16

Correlation Coefficient

Azvalor Global  BGF Global

Good diversification

The 3 months correlation between Azvalor and BGF is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Azvalor Global Value 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 Azvalor Global 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 Azvalor Global Value 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 Azvalor Global i.e., Azvalor Global and BGF Global go up and down completely randomly.

Pair Corralation between Azvalor Global and BGF Global

Assuming the 90 days trading horizon Azvalor Global Value is expected to generate 70.1 times more return on investment than BGF Global. However, Azvalor Global is 70.1 times more volatile than BGF Global Allocation. It trades about 0.04 of its potential returns per unit of risk. BGF Global Allocation is currently generating about 0.07 per unit of risk. If you would invest  19,135  in Azvalor Global Value on October 5, 2024 and sell it today you would lose (44.00) from holding Azvalor Global Value or give up 0.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.86%
Values	Daily Returns

Azvalor Global Value  vs.  BGF Global Allocation

Azvalor Global Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

BGF Global Allocation

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BGF Global Allocation has generated negative risk-adjusted returns adding no value to fund investors. 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 Azvalor Global and BGF Global

The main advantage of trading using opposite Azvalor Global and BGF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azvalor Global 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 Azvalor Global Value 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.