Correlation Between International Equity and Causeway International
Can any of the company-specific risk be diversified away by investing in both International Equity and Causeway International 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 Equity and Causeway International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Portfolio and Causeway International Value, you can compare the effects of market volatilities on International Equity and Causeway International 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 Equity with a short position of Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Causeway International.
Diversification Opportunities for International Equity and Causeway International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Causeway is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Portfolio and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and International Equity 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 Equity Portfolio are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of International Equity i.e., International Equity and Causeway International go up and down completely randomly.
Pair Corralation between International Equity and Causeway International
Assuming the 90 days horizon International Equity Portfolio is expected to under-perform the Causeway International. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Equity Portfolio is 1.03 times less risky than Causeway International. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Causeway International Value is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,242 in Causeway International Value on June 8, 2025 and sell it today you would earn a total of 62.00 from holding Causeway International Value or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Equity Portfolio vs. Causeway International Value
Performance |
| Timeline |
| International Equity |
| Causeway International |
International Equity and Causeway International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Causeway International
The main advantage of trading using opposite International Equity and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.| International Equity vs. T Rowe Price | International Equity vs. Causeway International Value | International Equity vs. Short Term Fund Administrative | International Equity vs. Miller Opportunity Trust |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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