Correlation Between William Blair and International Opportunity

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

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

Diversification Opportunities for William Blair and International Opportunity

0.67

Correlation Coefficient

William Blair  International Opportunity

Poor diversification

The 3 months correlation between William and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Small Mid and International Opportunity Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Opportunity and William Blair 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 William Blair Small Mid are associated (or correlated) with International Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Opportunity has no effect on the direction of William Blair i.e., William Blair and International Opportunity go up and down completely randomly.

Pair Corralation between William Blair and International Opportunity

Assuming the 90 days horizon William Blair Small Mid is expected to generate 0.92 times more return on investment than International Opportunity. However, William Blair Small Mid is 1.09 times less risky than International Opportunity. It trades about 0.19 of its potential returns per unit of risk. International Opportunity Portfolio is currently generating about 0.13 per unit of risk. If you would invest  2,728  in William Blair Small Mid on September 3, 2024 and sell it today you would earn a total of  329.00  from holding William Blair Small Mid or generate 12.06% return on investment over 90 days.

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

William Blair Small Mid  vs.  International Opportunity Port

William Blair Small

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Small Mid are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

International Opportunity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Opportunity Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, International Opportunity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with William Blair and International Opportunity

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

The idea behind William Blair Small Mid and International Opportunity Portfolio 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.