Correlation Between Champlain Small and Glg Intl
Can any of the company-specific risk be diversified away by investing in both Champlain Small 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 Champlain Small and Glg Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Glg Intl Small, you can compare the effects of market volatilities on Champlain Small 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 Champlain Small with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Glg Intl.
Diversification Opportunities for Champlain Small and Glg Intl
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champlain and Glg is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small 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 Champlain Small 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 Champlain Small 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 Champlain Small i.e., Champlain Small and Glg Intl go up and down completely randomly.
Pair Corralation between Champlain Small and Glg Intl
Assuming the 90 days horizon Champlain Small is expected to generate 1.28 times more return on investment than Glg Intl. However, Champlain Small is 1.28 times more volatile than Glg Intl Small. It trades about 0.21 of its potential returns per unit of risk. Glg Intl Small is currently generating about 0.23 per unit of risk. If you would invest 2,220 in Champlain Small on September 6, 2024 and sell it today you would earn a total of 363.00 from holding Champlain Small or generate 16.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Champlain Small vs. Glg Intl Small
Performance |
Timeline |
Champlain Small |
Glg Intl Small |
Champlain Small and Glg Intl Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Champlain Small and Glg Intl
The main advantage of trading using opposite Champlain Small and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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.Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Washington Mutual Investors | Champlain Small vs. Aquagold International | Champlain Small vs. Morningstar Unconstrained Allocation |
Glg Intl vs. Vanguard Financials Index | Glg Intl vs. Fidelity Advisor Financial | Glg Intl vs. 1919 Financial Services | Glg Intl vs. Davis Financial Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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