Correlation Between Gmo Emerging and Gmo Trust
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Gmo Trust 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 Emerging and Gmo Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Emerging Markets and Gmo Trust , you can compare the effects of market volatilities on Gmo Emerging and Gmo Trust 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 Emerging with a short position of Gmo Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Gmo Trust.
Diversification Opportunities for Gmo Emerging and Gmo Trust
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Gmo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust and Gmo Emerging 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 Emerging Markets are associated (or correlated) with Gmo Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Trust has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Gmo Trust go up and down completely randomly.
Pair Corralation between Gmo Emerging and Gmo Trust
Assuming the 90 days horizon Gmo Emerging Markets is expected to under-perform the Gmo Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo Emerging Markets is 1.73 times less risky than Gmo Trust. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Gmo Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,048 in Gmo Trust on August 29, 2024 and sell it today you would lose (12.00) from holding Gmo Trust or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Emerging Markets vs. Gmo Trust
Performance |
| Timeline |
| Gmo Emerging Markets |
| Gmo Trust |
Gmo Emerging and Gmo Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Gmo Trust
The main advantage of trading using opposite Gmo Emerging and Gmo Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Gmo Trust 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 Gmo Trust will offset losses from the drop in Gmo Trust's long position.| Gmo Emerging vs. Locorr Longshort Modities | Gmo Emerging vs. Barings Active Short | Gmo Emerging vs. Ab Select Longshort | Gmo Emerging vs. Quantitative Longshort Equity |
| Gmo Trust vs. Gmo E Plus | Gmo Trust vs. Gmo Trust | Gmo Trust vs. Gmo Treasury Fund | Gmo Trust vs. Gmo Emerging Markets |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |