Correlation Between Gmo Emerging and Gmo International
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Gmo International 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 International 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 International Equity, you can compare the effects of market volatilities on Gmo Emerging and Gmo International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Gmo International.
Diversification Opportunities for Gmo Emerging and Gmo International
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Gmo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Gmo International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo International Equity 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo International Equity has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Gmo International go up and down completely randomly.
Pair Corralation between Gmo Emerging and Gmo International
Assuming the 90 days horizon Gmo Emerging Markets is expected to generate 0.84 times more return on investment than Gmo International. However, Gmo Emerging Markets is 1.19 times less risky than Gmo International. It trades about -0.13 of its potential returns per unit of risk. Gmo International Equity is currently generating about -0.12 per unit of risk. If you would invest 2,484 in Gmo Emerging Markets on August 31, 2024 and sell it today you would lose (52.00) from holding Gmo Emerging Markets or give up 2.09% 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 International Equity
Performance |
| Timeline |
| Gmo Emerging Markets |
| Gmo International Equity |
Gmo Emerging and Gmo International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Gmo International
The main advantage of trading using opposite Gmo Emerging and Gmo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Gmo International 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 International will offset losses from the drop in Gmo International's long position.| Gmo Emerging vs. Pear Tree Polaris | Gmo Emerging vs. Artisan High Income | Gmo Emerging vs. HUMANA INC | Gmo Emerging vs. Aquagold International |
| Gmo International vs. Asg Managed Futures | Gmo International vs. Cref Inflation Linked Bond | Gmo International vs. Ab Bond Inflation | Gmo International vs. Ab Bond Inflation |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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