Correlation Between Fixed Income and Gmo Asset
Can any of the company-specific risk be diversified away by investing in both Fixed Income and Gmo Asset 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 Fixed Income and Gmo Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fixed Income Shares and Gmo Asset Allocation, you can compare the effects of market volatilities on Fixed Income and Gmo Asset 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 Fixed Income with a short position of Gmo Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fixed Income and Gmo Asset.
Diversification Opportunities for Fixed Income and Gmo Asset
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fixed and Gmo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fixed Income Shares and Gmo Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Asset Allocation and Fixed Income 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 Fixed Income Shares are associated (or correlated) with Gmo Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Asset Allocation has no effect on the direction of Fixed Income i.e., Fixed Income and Gmo Asset go up and down completely randomly.
Pair Corralation between Fixed Income and Gmo Asset
Assuming the 90 days horizon Fixed Income Shares is expected to generate 0.4 times more return on investment than Gmo Asset. However, Fixed Income Shares is 2.53 times less risky than Gmo Asset. It trades about 0.07 of its potential returns per unit of risk. Gmo Asset Allocation is currently generating about 0.01 per unit of risk. If you would invest 793.00 in Fixed Income Shares on September 2, 2024 and sell it today you would earn a total of 113.00 from holding Fixed Income Shares or generate 14.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fixed Income Shares vs. Gmo Asset Allocation
Performance |
| Timeline |
| Fixed Income Shares |
| Gmo Asset Allocation |
Fixed Income and Gmo Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fixed Income and Gmo Asset
The main advantage of trading using opposite Fixed Income and Gmo Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fixed Income position performs unexpectedly, Gmo Asset 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 Asset will offset losses from the drop in Gmo Asset's long position.| Fixed Income vs. Franklin Real Estate | Fixed Income vs. Msif Real Estate | Fixed Income vs. Commonwealth Real Estate | Fixed Income vs. Deutsche Real Estate |
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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 Stocks Directory module to find actively traded stocks across global markets.
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