Correlation Between Gmo Emerging and Gmo Small
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Gmo Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Gmo Emerging and Gmo Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Gmo Small.
Diversification Opportunities for Gmo Emerging and Gmo Small
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Gmo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Gmo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Small Cap has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Gmo Small go up and down completely randomly.
Pair Corralation between Gmo Emerging and Gmo Small
Assuming the 90 days horizon Gmo Emerging is expected to generate 1.97 times less return on investment than Gmo Small. But when comparing it to its historical volatility, Gmo Emerging Markets is 1.27 times less risky than Gmo Small. It trades about 0.05 of its potential returns per unit of risk. Gmo Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,829 in Gmo Small Cap on August 26, 2024 and sell it today you would earn a total of 825.00 from holding Gmo Small Cap or generate 45.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Emerging Markets vs. Gmo Small Cap
Performance |
| Timeline |
| Gmo Emerging Markets |
| Gmo Small Cap |
Gmo Emerging and Gmo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Gmo Small
The main advantage of trading using opposite Gmo Emerging and Gmo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Gmo Small 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 Small will offset losses from the drop in Gmo Small's long position.| Gmo Emerging vs. Usaa Mutual Funds | Gmo Emerging vs. Institutional Fiduciary Trust | Gmo Emerging vs. Aim Investment Secs | Gmo Emerging vs. Ashmore Emerging Markets |
| Gmo Small vs. Gmo E Plus | Gmo Small vs. Gmo Trust | Gmo Small vs. Gmo Treasury Fund | Gmo Small vs. Gmo Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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