Correlation Between Global Core and Advantage Portfolio

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Global Core and Advantage 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 Global Core and Advantage Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Portfolio and Advantage Portfolio Class, you can compare the effects of market volatilities on Global Core and Advantage 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 Global Core with a short position of Advantage Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Advantage Portfolio.

Diversification Opportunities for Global Core and Advantage Portfolio

0.87
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Global Core and Advantage Portfolio

Assuming the 90 days horizon Global Core is expected to generate 3.13 times less return on investment than Advantage Portfolio. But when comparing it to its historical volatility, Global E Portfolio is 1.78 times less risky than Advantage Portfolio. It trades about 0.21 of its potential returns per unit of risk. Advantage Portfolio Class is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,852  in Advantage Portfolio Class on September 5, 2024 and sell it today you would earn a total of  645.00  from holding Advantage Portfolio Class or generate 34.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Global E Portfolio  vs.  Advantage Portfolio Class

 Performance 
       Timeline  
Global E Portfolio 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Global E Portfolio are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Advantage Portfolio Class 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Portfolio Class are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Advantage Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Global Core and Advantage Portfolio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Core and Advantage Portfolio

The main advantage of trading using opposite Global Core and Advantage Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core position performs unexpectedly, Advantage 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 Advantage Portfolio will offset losses from the drop in Advantage Portfolio's long position.
The idea behind Global E Portfolio and Advantage Portfolio Class 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum