Correlation Between Gmo Global and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Old Westbury 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 Global and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Equity and Old Westbury Fixed, you can compare the effects of market volatilities on Gmo Global and Old Westbury 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 Global with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Old Westbury.
Diversification Opportunities for Gmo Global and Old Westbury
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMO and Old is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Old Westbury Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Fixed and Gmo Global 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 Global Equity are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Fixed has no effect on the direction of Gmo Global i.e., Gmo Global and Old Westbury go up and down completely randomly.
Pair Corralation between Gmo Global and Old Westbury
Assuming the 90 days horizon Gmo Global Equity is expected to generate 8.82 times more return on investment than Old Westbury. However, Gmo Global is 8.82 times more volatile than Old Westbury Fixed. It trades about 0.04 of its potential returns per unit of risk. Old Westbury Fixed is currently generating about 0.1 per unit of risk. If you would invest 2,823 in Gmo Global Equity on October 23, 2024 and sell it today you would earn a total of 31.00 from holding Gmo Global Equity or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Old Westbury Fixed
Performance |
| Timeline |
| Gmo Global Equity |
| Old Westbury Fixed |
Gmo Global and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Old Westbury
The main advantage of trading using opposite Gmo Global and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Gmo Global vs. Msift High Yield | Gmo Global vs. Guggenheim High Yield | Gmo Global vs. Siit High Yield | Gmo Global vs. Simt High Yield |
| Old Westbury vs. T Rowe Price | Old Westbury vs. Putnam Global Financials | Old Westbury vs. Angel Oak Financial | Old Westbury vs. Fidelity Advisor 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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