Correlation Between Glg Intl and Cambiar Smid

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

By analyzing existing cross correlation between Glg Intl Small and Cambiar Smid Fund, you can compare the effects of market volatilities on Glg Intl and Cambiar Smid 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 Glg Intl with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Cambiar Smid.

Diversification Opportunities for Glg Intl and Cambiar Smid

0.62

Correlation Coefficient

Glg Intl  Cambiar Smid

Poor diversification

The 3 months correlation between Glg and Cambiar is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and Glg Intl 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 Glg Intl Small are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Glg Intl i.e., Glg Intl and Cambiar Smid go up and down completely randomly.

Pair Corralation between Glg Intl and Cambiar Smid

Assuming the 90 days horizon Glg Intl Small is expected to under-perform the Cambiar Smid. In addition to that, Glg Intl is 1.34 times more volatile than Cambiar Smid Fund. It trades about -0.02 of its total potential returns per unit of risk. Cambiar Smid Fund is currently generating about -0.01 per unit of volatility. If you would invest  2,243  in Cambiar Smid Fund on December 20, 2024 and sell it today you would lose (18.00) from holding Cambiar Smid Fund or give up 0.8% of portfolio value over 90 days.

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

Glg Intl Small  vs.  Cambiar Smid Fund

Glg Intl Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glg Intl Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Glg Intl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cambiar Smid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cambiar Smid Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Cambiar Smid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Glg Intl and Cambiar Smid

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

The idea behind Glg Intl Small and Cambiar Smid Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.