Correlation Between International Investors and Strategic Allocation

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

By analyzing existing cross correlation between International Investors Gold and Strategic Allocation Moderate, you can compare the effects of market volatilities on International Investors and Strategic 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 International Investors with a short position of Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Strategic Allocation.

Diversification Opportunities for International Investors and Strategic Allocation

0.62

Correlation Coefficient

International Investors  Strategic Allocation

Poor diversification

The 3 months correlation between International and Strategic is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Strategic Allocation Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and International Investors 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 International Investors Gold are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of International Investors i.e., International Investors and Strategic Allocation go up and down completely randomly.

Pair Corralation between International Investors and Strategic Allocation

Assuming the 90 days horizon International Investors Gold is expected to generate 4.56 times more return on investment than Strategic Allocation. However, International Investors is 4.56 times more volatile than Strategic Allocation Moderate. It trades about 0.06 of its potential returns per unit of risk. Strategic Allocation Moderate is currently generating about 0.19 per unit of risk. If you would invest  1,205  in International Investors Gold on May 5, 2025 and sell it today you would earn a total of  89.00  from holding International Investors Gold or generate 7.39% return on investment over 90 days.

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

International Investors Gold  vs.  Strategic Allocation Moderate

International Investors

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Investors Gold are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, International Investors may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Strategic Allocation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Moderate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic 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 International Investors and Strategic Allocation

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

The idea behind International Investors Gold and Strategic Allocation Moderate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.