Correlation Between Gmo Global and Templeton World
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Templeton World 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 Templeton World 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 Templeton World Fund, you can compare the effects of market volatilities on Gmo Global and Templeton World 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 Templeton World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Templeton World.
Diversification Opportunities for Gmo Global and Templeton World
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMO and Templeton is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Templeton World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton World 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 Templeton World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton World has no effect on the direction of Gmo Global i.e., Gmo Global and Templeton World go up and down completely randomly.
Pair Corralation between Gmo Global and Templeton World
Assuming the 90 days horizon Gmo Global Equity is expected to generate 2.46 times more return on investment than Templeton World. However, Gmo Global is 2.46 times more volatile than Templeton World Fund. It trades about 0.04 of its potential returns per unit of risk. Templeton World Fund is currently generating about 0.07 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. Templeton World Fund
Performance |
| Timeline |
| Gmo Global Equity |
| Templeton World |
Gmo Global and Templeton World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Templeton World
The main advantage of trading using opposite Gmo Global and Templeton World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Templeton World 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 Templeton World will offset losses from the drop in Templeton World'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 |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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