Correlation Between Glg Intl and Congress Large

Can any of the company-specific risk be diversified away by investing in both Glg Intl and Congress Large 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 Congress Large 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 Congress Large Cap, you can compare the effects of market volatilities on Glg Intl and Congress Large 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 Congress Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Congress Large.

Diversification Opportunities for Glg Intl and Congress Large

0.87

Correlation Coefficient

Glg Intl  Congress Large

Very poor diversification

The 3 months correlation between Glg and Congress is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Congress Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Large Cap 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 Congress Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Large Cap has no effect on the direction of Glg Intl i.e., Glg Intl and Congress Large go up and down completely randomly.

Pair Corralation between Glg Intl and Congress Large

Assuming the 90 days horizon Glg Intl Small is expected to generate 1.16 times more return on investment than Congress Large. However, Glg Intl is 1.16 times more volatile than Congress Large Cap. It trades about 0.12 of its potential returns per unit of risk. Congress Large Cap is currently generating about 0.13 per unit of risk. If you would invest  6,215  in Glg Intl Small on September 6, 2024 and sell it today you would earn a total of  2,466  from holding Glg Intl Small or generate 39.68% return on investment over 90 days.

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

Glg Intl Small  vs.  Congress Large Cap

Glg Intl Small

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Glg Intl showed solid returns over the last few months and may actually be approaching a breakup point.

Congress Large Cap

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Congress Large Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Congress Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glg Intl and Congress Large

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

The idea behind Glg Intl Small and Congress Large Cap 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.