Correlation Between Global Concentrated and Growth Portfolio

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

By analyzing existing cross correlation between Global Centrated Portfolio and Growth Portfolio Class, you can compare the effects of market volatilities on Global Concentrated and Growth 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 Concentrated with a short position of Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Concentrated and Growth Portfolio.

Diversification Opportunities for Global Concentrated and Growth Portfolio

0.63

Correlation Coefficient

Global Concentrated  Growth Portfolio

Poor diversification

The 3 months correlation between GLOBAL and Growth is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global Centrated Portfolio and Growth Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class and Global Concentrated 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 Centrated Portfolio are associated (or correlated) with Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of Global Concentrated i.e., Global Concentrated and Growth Portfolio go up and down completely randomly.

Pair Corralation between Global Concentrated and Growth Portfolio

Assuming the 90 days horizon Global Centrated Portfolio is expected to generate 0.55 times more return on investment than Growth Portfolio. However, Global Centrated Portfolio is 1.82 times less risky than Growth Portfolio. It trades about 0.0 of its potential returns per unit of risk. Growth Portfolio Class is currently generating about -0.03 per unit of risk. If you would invest  2,440  in Global Centrated Portfolio on December 1, 2024 and sell it today you would lose (10.00) from holding Global Centrated Portfolio or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Global Centrated Portfolio  vs.  Growth Portfolio Class

Global Centrated Por

Risk-Adjusted Performance

Very Weak

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

Growth Portfolio Class

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Global Concentrated and Growth Portfolio

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

The idea behind Global Centrated Portfolio and Growth 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.