Correlation Between Gmo Emerging and Energy Services
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Energy Services 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 Energy Services 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 Energy Services Fund, you can compare the effects of market volatilities on Gmo Emerging and Energy Services 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 Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Energy Services.
Diversification Opportunities for Gmo Emerging and Energy Services
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gmo and ENERGY is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Energy Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services 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 Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Energy Services go up and down completely randomly.
Pair Corralation between Gmo Emerging and Energy Services
Assuming the 90 days horizon Gmo Emerging Markets is expected to under-perform the Energy Services. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo Emerging Markets is 3.23 times less risky than Energy Services. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Energy Services Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 22,166 in Energy Services Fund on September 1, 2024 and sell it today you would earn a total of 2,461 from holding Energy Services Fund or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gmo Emerging Markets vs. Energy Services Fund
Performance |
| Timeline |
| Gmo Emerging Markets |
| Energy Services |
Gmo Emerging and Energy Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Energy Services
The main advantage of trading using opposite Gmo Emerging and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' long position.| Gmo Emerging vs. Hennessy Bp Energy | Gmo Emerging vs. Alpsalerian Energy Infrastructure | Gmo Emerging vs. Icon Natural Resources | Gmo Emerging vs. Ivy Energy Fund |
| Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund | Energy Services vs. Precious Metals 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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