Correlation Between Federated Government and Gmo Trust
Can any of the company-specific risk be diversified away by investing in both Federated Government 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 Federated Government and Gmo Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Ultrashort and Gmo Trust , you can compare the effects of market volatilities on Federated Government 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 Federated Government with a short position of Gmo Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Gmo Trust.
Diversification Opportunities for Federated Government and Gmo Trust
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEDERATED and Gmo is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust and Federated Government 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 Federated Government Ultrashort 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 Federated Government i.e., Federated Government and Gmo Trust go up and down completely randomly.
Pair Corralation between Federated Government and Gmo Trust
Assuming the 90 days horizon Federated Government Ultrashort is expected to generate 0.09 times more return on investment than Gmo Trust. However, Federated Government Ultrashort is 11.6 times less risky than Gmo Trust. It trades about 0.17 of its potential returns per unit of risk. Gmo Trust is currently generating about -0.07 per unit of risk. If you would invest 974.00 in Federated Government Ultrashort on October 26, 2024 and sell it today you would earn a total of 7.00 from holding Federated Government Ultrashort or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Gmo Trust
Performance |
| Timeline |
| Federated Government |
| Gmo Trust |
Federated Government and Gmo Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Gmo Trust
The main advantage of trading using opposite Federated Government and Gmo Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government 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.| Federated Government vs. Federated Emerging Market | Federated Government vs. Federated Mdt All | Federated Government vs. Federated Mdt Balanced | Federated Government vs. Federated Global Allocation |
| Gmo Trust vs. Jhancock Short Duration | Gmo Trust vs. Federated Government Ultrashort | Gmo Trust vs. Oakhurst Short Duration | Gmo Trust vs. Blackrock Global Longshort |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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