Correlation Between California High-yield and Gmo Trust
Can any of the company-specific risk be diversified away by investing in both California High-yield and Gmo Trust 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 California High-yield and Gmo Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Gmo Trust , you can compare the effects of market volatilities on California High-yield and Gmo Trust 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 California High-yield with a short position of Gmo Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Gmo Trust.
Diversification Opportunities for California High-yield and Gmo Trust
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between California and Gmo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust and California High-yield 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 California High Yield Municipal are associated (or correlated) with Gmo Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Trust has no effect on the direction of California High-yield i.e., California High-yield and Gmo Trust go up and down completely randomly.
Pair Corralation between California High-yield and Gmo Trust
Assuming the 90 days horizon California High Yield Municipal is expected to generate 0.17 times more return on investment than Gmo Trust. However, California High Yield Municipal is 5.88 times less risky than Gmo Trust. It trades about 0.07 of its potential returns per unit of risk. Gmo Trust is currently generating about -0.04 per unit of risk. If you would invest 900.00 in California High Yield Municipal on September 3, 2024 and sell it today you would earn a total of 95.00 from holding California High Yield Municipal or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.11% |
| Values | Daily Returns |
California High Yield Municipa vs. Gmo Trust
Performance |
| Timeline |
| California High Yield |
| Gmo Trust |
California High-yield and Gmo Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Gmo Trust
The main advantage of trading using opposite California High-yield and Gmo Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Gmo Trust 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 Trust will offset losses from the drop in Gmo Trust's long position.| California High-yield vs. Volumetric Fund Volumetric | California High-yield vs. Abr 7525 Volatility | California High-yield vs. Qs Large Cap | California High-yield vs. Ab Value Fund |
| Gmo Trust vs. Ab High Income | Gmo Trust vs. Needham Aggressive Growth | Gmo Trust vs. Lgm Risk Managed | Gmo Trust vs. Morningstar Aggressive Growth |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |