Correlation Between Metropolitan West and Glg Intl

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

By analyzing existing cross correlation between Metropolitan West Ultra and Glg Intl Small, you can compare the effects of market volatilities on Metropolitan West and Glg Intl 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 Metropolitan West with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Glg Intl.

Diversification Opportunities for Metropolitan West and Glg Intl

-0.12

Correlation Coefficient

Metropolitan West  Glg Intl

Good diversification

The 3 months correlation between Metropolitan and Glg is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Ultra and Glg Intl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glg Intl Small and Metropolitan West 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 Metropolitan West Ultra are associated (or correlated) with Glg Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glg Intl Small has no effect on the direction of Metropolitan West i.e., Metropolitan West and Glg Intl go up and down completely randomly.

Pair Corralation between Metropolitan West and Glg Intl

Assuming the 90 days horizon Metropolitan West Ultra is expected to generate 0.12 times more return on investment than Glg Intl. However, Metropolitan West Ultra is 8.3 times less risky than Glg Intl. It trades about 0.2 of its potential returns per unit of risk. Glg Intl Small is currently generating about -0.04 per unit of risk. If you would invest  409.00  in Metropolitan West Ultra on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Metropolitan West Ultra or generate 1.71% return on investment over 90 days.

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

Metropolitan West Ultra  vs.  Glg Intl Small

Metropolitan West Ultra

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan West Ultra are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Metropolitan West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Glg Intl Small

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Metropolitan West and Glg Intl

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

The idea behind Metropolitan West Ultra and Glg Intl Small 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.