Correlation Between Gmo High and Midcap Growth
Can any of the company-specific risk be diversified away by investing in both Gmo High and Midcap Growth 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 High and Midcap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Midcap Growth Fund, you can compare the effects of market volatilities on Gmo High and Midcap Growth 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 High with a short position of Midcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Midcap Growth.
Diversification Opportunities for Gmo High and Midcap Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Midcap is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth and Gmo High 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 High Yield are associated (or correlated) with Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Gmo High i.e., Gmo High and Midcap Growth go up and down completely randomly.
Pair Corralation between Gmo High and Midcap Growth
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.16 times more return on investment than Midcap Growth. However, Gmo High Yield is 6.07 times less risky than Midcap Growth. It trades about 0.08 of its potential returns per unit of risk. Midcap Growth Fund is currently generating about 0.01 per unit of risk. If you would invest 1,674 in Gmo High Yield on October 26, 2024 and sell it today you would earn a total of 11.00 from holding Gmo High Yield or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Midcap Growth Fund
Performance |
| Timeline |
| Gmo High Yield |
| Midcap Growth |
Gmo High and Midcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Midcap Growth
The main advantage of trading using opposite Gmo High and Midcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Midcap Growth 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 Midcap Growth will offset losses from the drop in Midcap Growth's long position.| Gmo High vs. Franklin High Yield | Gmo High vs. T Rowe Price | Gmo High vs. T Rowe Price | Gmo High vs. T Rowe Price |
| Midcap Growth vs. Prudential High Yield | Midcap Growth vs. Artisan High Income | Midcap Growth vs. Gmo High Yield | Midcap Growth vs. Pace High Yield |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |