Correlation Between Ultra Fund and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Ultra Fund and Gmo Global 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 Ultra Fund and Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Fund Y and Gmo Global Equity, you can compare the effects of market volatilities on Ultra Fund and Gmo Global 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 Ultra Fund with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and Gmo Global.
Diversification Opportunities for Ultra Fund and Gmo Global
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ultra and Gmo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund Y and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Ultra Fund 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 Ultra Fund Y are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Ultra Fund i.e., Ultra Fund and Gmo Global go up and down completely randomly.
Pair Corralation between Ultra Fund and Gmo Global
Assuming the 90 days horizon Ultra Fund Y is expected to generate 1.52 times more return on investment than Gmo Global. However, Ultra Fund is 1.52 times more volatile than Gmo Global Equity. It trades about 0.35 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.15 per unit of risk. If you would invest 9,813 in Ultra Fund Y on September 5, 2024 and sell it today you would earn a total of 724.00 from holding Ultra Fund Y or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ultra Fund Y vs. Gmo Global Equity
Performance |
| Timeline |
| Ultra Fund Y |
| Gmo Global Equity |
Ultra Fund and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and Gmo Global
The main advantage of trading using opposite Ultra Fund and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund position performs unexpectedly, Gmo Global 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 Global will offset losses from the drop in Gmo Global's long position.| Ultra Fund vs. Ultra Fund C | Ultra Fund vs. Select Fund R | Ultra Fund vs. Select Fund C | Ultra Fund vs. American Century Ultra |
| Gmo Global vs. Fidelity Capital Income | Gmo Global vs. Siit High Yield | Gmo Global vs. Goldman Sachs High | Gmo Global vs. Alpine High Yield |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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