Correlation Between Federated High and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Federated High 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 Federated High and Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Yield and Gmo Global Equity, you can compare the effects of market volatilities on Federated High 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 Federated High with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Gmo Global.
Diversification Opportunities for Federated High and Gmo Global
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federated and Gmo is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield 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 Federated High 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 High Yield 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 Federated High i.e., Federated High and Gmo Global go up and down completely randomly.
Pair Corralation between Federated High and Gmo Global
Assuming the 90 days horizon Federated High Yield is expected to generate 0.2 times more return on investment than Gmo Global. However, Federated High Yield is 5.05 times less risky than Gmo Global. It trades about 0.13 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.02 per unit of risk. If you would invest 628.00 in Federated High Yield on October 26, 2024 and sell it today you would earn a total of 12.00 from holding Federated High Yield or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Gmo Global Equity
Performance |
| Timeline |
| Federated High Yield |
| Gmo Global Equity |
Federated High and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Gmo Global
The main advantage of trading using opposite Federated High and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High 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.| Federated High vs. Ab Small Cap | Federated High vs. Walden Smid Cap | Federated High vs. Omni Small Cap Value |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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