Correlation Between Financial Industries and Gmo Trust
Can any of the company-specific risk be diversified away by investing in both Financial Industries 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 Financial Industries and Gmo Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Gmo Trust , you can compare the effects of market volatilities on Financial Industries 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 Financial Industries with a short position of Gmo Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Gmo Trust.
Diversification Opportunities for Financial Industries and Gmo Trust
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Gmo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust and Financial Industries 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 Financial Industries Fund 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 Financial Industries i.e., Financial Industries and Gmo Trust go up and down completely randomly.
Pair Corralation between Financial Industries and Gmo Trust
Assuming the 90 days horizon Financial Industries Fund is expected to under-perform the Gmo Trust. In addition to that, Financial Industries is 2.3 times more volatile than Gmo Trust . It trades about -0.36 of its total potential returns per unit of risk. Gmo Trust is currently generating about -0.08 per unit of volatility. If you would invest 2,200 in Gmo Trust on October 16, 2024 and sell it today you would lose (33.00) from holding Gmo Trust or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Gmo Trust
Performance |
| Timeline |
| Financial Industries |
| Gmo Trust |
Financial Industries and Gmo Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Gmo Trust
The main advantage of trading using opposite Financial Industries and Gmo Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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.| Financial Industries vs. Rationalpier 88 Convertible | Financial Industries vs. Predex Funds | Financial Industries vs. Versatile Bond Portfolio | Financial Industries vs. T Rowe Price |
| Gmo Trust vs. Financial Industries Fund | Gmo Trust vs. 1919 Financial Services | Gmo Trust vs. Rmb Mendon Financial | Gmo Trust vs. John Hancock Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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