Correlation Between World Core and Global Allocation

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

By analyzing existing cross correlation between World Core Equity and Global Allocation 6040, you can compare the effects of market volatilities on World Core and Global Allocation 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 World Core with a short position of Global Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Core and Global Allocation.

Diversification Opportunities for World Core and Global Allocation

1.0

Correlation Coefficient

World Core  Global Allocation

No risk reduction

The 3 months correlation between World and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding World Core Equity and Global Allocation 6040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Allocation 6040 and World 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 World Core Equity are associated (or correlated) with Global Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Allocation 6040 has no effect on the direction of World Core i.e., World Core and Global Allocation go up and down completely randomly.

Pair Corralation between World Core and Global Allocation

Assuming the 90 days horizon World Core Equity is expected to generate 1.54 times more return on investment than Global Allocation. However, World Core is 1.54 times more volatile than Global Allocation 6040. It trades about 0.22 of its potential returns per unit of risk. Global Allocation 6040 is currently generating about 0.23 per unit of risk. If you would invest  2,421  in World Core Equity on May 4, 2025 and sell it today you would earn a total of  221.00  from holding World Core Equity or generate 9.13% return on investment over 90 days.

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

World Core Equity  vs.  Global Allocation 6040

World Core Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in World Core Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, World Core may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Global Allocation 6040

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Allocation 6040 are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Global Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with World Core and Global Allocation

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

The idea behind World Core Equity and Global Allocation 6040 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.