Correlation Between BGF Euro and BGF Global

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

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

Diversification Opportunities for BGF Euro and BGF Global

0.0

Correlation Coefficient

BGF Euro  BGF Global

Pay attention - limited upside

The 3 months correlation between BGF and BGF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BGF Euro Markets 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 BGF Euro 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 BGF Euro Markets 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 BGF Euro i.e., BGF Euro and BGF Global go up and down completely randomly.

Pair Corralation between BGF Euro and BGF Global

If you would invest  4,275  in BGF Euro Markets on October 24, 2024 and sell it today you would earn a total of  439.00  from holding BGF Euro Markets or generate 10.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BGF Euro Markets  vs.  BGF Global Allocation

BGF Euro Markets

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Euro Markets 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 Euro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BGF Global Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BGF Euro and BGF Global

The main advantage of trading using opposite BGF Euro and BGF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Euro 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 BGF Euro Markets 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.