Correlation Between Gmo Global and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Washington Mutual 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 Washington Mutual 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 Washington Mutual Investors, you can compare the effects of market volatilities on Gmo Global and Washington Mutual 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Washington Mutual.
Diversification Opportunities for Gmo Global and Washington Mutual
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Washington is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual 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 Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Gmo Global i.e., Gmo Global and Washington Mutual go up and down completely randomly.
Pair Corralation between Gmo Global and Washington Mutual
Assuming the 90 days horizon Gmo Global Equity is expected to generate 1.29 times more return on investment than Washington Mutual. However, Gmo Global is 1.29 times more volatile than Washington Mutual Investors. It trades about 0.01 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about -0.03 per unit of risk. If you would invest 2,907 in Gmo Global Equity on November 7, 2024 and sell it today you would earn a total of 4.00 from holding Gmo Global Equity or generate 0.14% 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. Washington Mutual Investors
Performance |
| Timeline |
| Gmo Global Equity |
| Washington Mutual |
Gmo Global and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Washington Mutual
The main advantage of trading using opposite Gmo Global and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Gmo Global vs. Angel Oak Multi Strategy | Gmo Global vs. Commodities Strategy Fund | Gmo Global vs. Transamerica Emerging Markets | Gmo Global vs. Franklin Emerging Market |
| Washington Mutual vs. Federated Emerging Market | Washington Mutual vs. Qs Large Cap | Washington Mutual vs. Cardinal Small Cap | Washington Mutual vs. Rbb Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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