Correlation Between Global Concentrated and Global Fixed

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

Diversification Opportunities for Global Concentrated and Global Fixed

0.06

Correlation Coefficient

Global Concentrated  Global Fixed

Significant diversification

The 3 months correlation between Global and Global is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global Centrated Portfolio and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed Income 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 Global Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of Global Concentrated i.e., Global Concentrated and Global Fixed go up and down completely randomly.

Pair Corralation between Global Concentrated and Global Fixed

Assuming the 90 days horizon Global Centrated Portfolio is expected to generate 4.9 times more return on investment than Global Fixed. However, Global Concentrated is 4.9 times more volatile than Global Fixed Income. It trades about 0.1 of its potential returns per unit of risk. Global Fixed Income is currently generating about 0.14 per unit of risk. If you would invest  1,478  in Global Centrated Portfolio on September 1, 2024 and sell it today you would earn a total of  848.00  from holding Global Centrated Portfolio or generate 57.37% return on investment over 90 days.

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

Global Centrated Portfolio  vs.  Global Fixed Income

Global Centrated Por

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Centrated Portfolio are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Global Concentrated may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Global Fixed Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Fixed Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Global Fixed 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 Global Fixed

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

The idea behind Global Centrated Portfolio and Global Fixed Income 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.