Correlation Between Cavanal Hill and Gmo High
Can any of the company-specific risk be diversified away by investing in both Cavanal Hill and Gmo High 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 Cavanal Hill and Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cavanal Hill Funds and Gmo High Yield, you can compare the effects of market volatilities on Cavanal Hill and Gmo High 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 Cavanal Hill with a short position of Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cavanal Hill and Gmo High.
Diversification Opportunities for Cavanal Hill and Gmo High
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cavanal and GMO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cavanal Hill Funds and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield and Cavanal Hill 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 Cavanal Hill Funds are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Cavanal Hill i.e., Cavanal Hill and Gmo High go up and down completely randomly.
Pair Corralation between Cavanal Hill and Gmo High
Assuming the 90 days horizon Cavanal Hill Funds is expected to generate 52.35 times more return on investment than Gmo High. However, Cavanal Hill is 52.35 times more volatile than Gmo High Yield. It trades about 0.04 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.13 per unit of risk. If you would invest 92.00 in Cavanal Hill Funds on September 4, 2024 and sell it today you would earn a total of 8.00 from holding Cavanal Hill Funds or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.24% |
| Values | Daily Returns |
Cavanal Hill Funds vs. Gmo High Yield
Performance |
| Timeline |
| Cavanal Hill Funds |
| Gmo High Yield |
Cavanal Hill and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cavanal Hill and Gmo High
The main advantage of trading using opposite Cavanal Hill and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cavanal Hill position performs unexpectedly, Gmo High 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 Gmo High will offset losses from the drop in Gmo High's long position.| Cavanal Hill vs. Virtus Seix Government | Cavanal Hill vs. Ab Government Exchange | Cavanal Hill vs. Lord Abbett Government | Cavanal Hill vs. Short Term Government Fund |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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