Correlation Between Quantitative and International Portfolio

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

By analyzing existing cross correlation between Quantitative U S and International Portfolio International, you can compare the effects of market volatilities on Quantitative and International Portfolio 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 Quantitative with a short position of International Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantitative and International Portfolio.

Diversification Opportunities for Quantitative and International Portfolio

0.76

Correlation Coefficient

Quantitative  International Portfolio

Poor diversification

The 3 months correlation between Quantitative and International is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Quantitative U S and International Portfolio Intern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Portfolio and Quantitative 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 Quantitative U S are associated (or correlated) with International Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Portfolio has no effect on the direction of Quantitative i.e., Quantitative and International Portfolio go up and down completely randomly.

Pair Corralation between Quantitative and International Portfolio

Assuming the 90 days horizon Quantitative U S is expected to generate 1.34 times more return on investment than International Portfolio. However, Quantitative is 1.34 times more volatile than International Portfolio International. It trades about -0.01 of its potential returns per unit of risk. International Portfolio International is currently generating about -0.03 per unit of risk. If you would invest  1,297  in Quantitative U S on October 17, 2024 and sell it today you would lose (31.00) from holding Quantitative U S or give up 2.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.31%
Values	Daily Returns

Quantitative U S  vs.  International Portfolio Intern

Quantitative U S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quantitative U S has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

International Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Portfolio International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Quantitative and International Portfolio

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

The idea behind Quantitative U S and International Portfolio International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.