Correlation Between Gmo Global and Long Term
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Long Term 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 Long Term 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 Long Term Government Fund, you can compare the effects of market volatilities on Gmo Global and Long Term 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 Long Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Long Term.
Diversification Opportunities for Gmo Global and Long Term
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GMO and Long is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government 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 Long Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Gmo Global i.e., Gmo Global and Long Term go up and down completely randomly.
Pair Corralation between Gmo Global and Long Term
Assuming the 90 days horizon Gmo Global is expected to generate 7.99 times less return on investment than Long Term. But when comparing it to its historical volatility, Gmo Global Equity is 16.65 times less risky than Long Term. It trades about 0.07 of its potential returns per unit of risk. Long Term Government Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,455 in Long Term Government Fund on November 1, 2024 and sell it today you would lose (81.00) from holding Long Term Government Fund or give up 5.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Long Term Government Fund
Performance |
| Timeline |
| Gmo Global Equity |
| Long Term Government |
Gmo Global and Long Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Long Term
The main advantage of trading using opposite Gmo Global and Long Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Long Term 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 Long Term will offset losses from the drop in Long Term's long position.| Gmo Global vs. Ashmore Emerging Markets | Gmo Global vs. Lord Abbett Diversified | Gmo Global vs. Calvert Developed Market | Gmo Global vs. Ab All Market |
| Long Term vs. T Rowe Price | Long Term vs. Us Vector Equity | Long Term vs. Gmo Global Equity | Long Term vs. Siit Equity Factor |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| CEOs Directory Screen CEOs from public companies around the world |