Correlation Between Boston Common and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both Boston Common and Gmo Resources 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 Boston Common and Gmo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Mon International and Gmo Resources, you can compare the effects of market volatilities on Boston Common and Gmo Resources 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 Boston Common with a short position of Gmo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Common and Gmo Resources.
Diversification Opportunities for Boston Common and Gmo Resources
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Gmo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Boston Mon International and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources and Boston Common 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 Boston Mon International are associated (or correlated) with Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Boston Common i.e., Boston Common and Gmo Resources go up and down completely randomly.
Pair Corralation between Boston Common and Gmo Resources
Assuming the 90 days horizon Boston Mon International is expected to under-perform the Gmo Resources. But the mutual fund apears to be less risky and, when comparing its historical volatility, Boston Mon International is 1.71 times less risky than Gmo Resources. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Gmo Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,001 in Gmo Resources on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Gmo Resources or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Boston Mon International vs. Gmo Resources
Performance |
| Timeline |
| Boston Mon International |
| Gmo Resources |
Boston Common and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Common and Gmo Resources
The main advantage of trading using opposite Boston Common and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Common position performs unexpectedly, Gmo Resources 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 Resources will offset losses from the drop in Gmo Resources' long position.| Boston Common vs. Boston Mon Equity | Boston Common vs. Boston Common Esg | Boston Common vs. Fidelity Select Semiconductors | Boston Common vs. Russell 2000 2x |
| Gmo Resources vs. Rbb Fund | Gmo Resources vs. Omni Small Cap Value | Gmo Resources vs. Nasdaq 100 Index Fund | Gmo Resources vs. Artisan Thematic Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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