Correlation Between Gmo International and Gmo Small
Can any of the company-specific risk be diversified away by investing in both Gmo International 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 International 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 International Developed and Gmo Small Cap, you can compare the effects of market volatilities on Gmo International 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 International with a short position of Gmo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo International and Gmo Small.
Diversification Opportunities for Gmo International and Gmo Small
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gmo and Gmo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gmo International Developed 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 International 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 International Developed 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 International i.e., Gmo International and Gmo Small go up and down completely randomly.
Pair Corralation between Gmo International and Gmo Small
Assuming the 90 days horizon Gmo International is expected to generate 1.53 times less return on investment than Gmo Small. But when comparing it to its historical volatility, Gmo International Developed is 1.35 times less risky than Gmo Small. It trades about 0.06 of its potential returns per unit of risk. Gmo Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,196 in Gmo Small Cap on August 29, 2024 and sell it today you would earn a total of 556.00 from holding Gmo Small Cap or generate 25.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo International Developed vs. Gmo Small Cap
Performance |
| Timeline |
| Gmo International |
| Gmo Small Cap |
Gmo International and Gmo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo International and Gmo Small
The main advantage of trading using opposite Gmo International and Gmo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo International 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 International vs. Gmo Emerging Ntry | Gmo International vs. Gmo Quality Fund | Gmo International vs. Gmo Strategic Opportunities | Gmo International vs. Artisan Global Value |
| Gmo Small vs. Putnam Equity Income | Gmo Small vs. Putnam Growth Opportunities | Gmo Small vs. HUMANA INC | Gmo Small vs. Aquagold International |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |