Correlation Between Gmo Alternative and American Funds
Can any of the company-specific risk be diversified away by investing in both Gmo Alternative and American Funds 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 Gmo Alternative and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Alternative Allocation and American Funds Growth, you can compare the effects of market volatilities on Gmo Alternative and American Funds 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 Gmo Alternative with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Alternative and American Funds.
Diversification Opportunities for Gmo Alternative and American Funds
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gmo and American is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Alternative Allocation and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth and Gmo Alternative 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 Gmo Alternative Allocation are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Gmo Alternative i.e., Gmo Alternative and American Funds go up and down completely randomly.
Pair Corralation between Gmo Alternative and American Funds
Assuming the 90 days horizon Gmo Alternative Allocation is expected to under-perform the American Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo Alternative Allocation is 2.25 times less risky than American Funds. The mutual fund trades about -0.24 of its potential returns per unit of risk. The American Funds Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,665 in American Funds Growth on August 29, 2024 and sell it today you would earn a total of 70.00 from holding American Funds Growth or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gmo Alternative Allocation vs. American Funds Growth
Performance |
| Timeline |
| Gmo Alternative Allo |
| American Funds Growth |
Gmo Alternative and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Alternative and American Funds
The main advantage of trading using opposite Gmo Alternative and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Alternative position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Gmo Alternative vs. Janus Global Technology | Gmo Alternative vs. Hennessy Technology Fund | Gmo Alternative vs. Global Technology Portfolio | Gmo Alternative vs. Mfs Technology Fund |
| American Funds vs. Blackrock Inflation Protected | American Funds vs. Aqr Managed Futures | American Funds vs. The Hartford Inflation | American Funds vs. The Hartford Inflation |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |