Correlation Between Gmo Global and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Ab Bond 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 Global and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Equity and Ab Bond Inflation, you can compare the effects of market volatilities on Gmo Global and Ab Bond 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 Global with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Ab Bond.
Diversification Opportunities for Gmo Global and Ab Bond
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and ABNCX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and Gmo Global 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 Global Equity are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Gmo Global i.e., Gmo Global and Ab Bond go up and down completely randomly.
Pair Corralation between Gmo Global and Ab Bond
Assuming the 90 days horizon Gmo Global Equity is expected to generate 3.79 times more return on investment than Ab Bond. However, Gmo Global is 3.79 times more volatile than Ab Bond Inflation. It trades about 0.27 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.37 per unit of risk. If you would invest 2,829 in Gmo Global Equity on November 9, 2024 and sell it today you would earn a total of 109.00 from holding Gmo Global Equity or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Ab Bond Inflation
Performance |
| Timeline |
| Gmo Global Equity |
| Ab Bond Inflation |
Gmo Global and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Ab Bond
The main advantage of trading using opposite Gmo Global and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Ab Bond 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 Ab Bond will offset losses from the drop in Ab Bond's long position.| Gmo Global vs. Franklin Lifesmart Retirement | Gmo Global vs. Sierra E Retirement | Gmo Global vs. Columbia Moderate Growth | Gmo Global vs. Wealthbuilder Moderate Balanced |
| Ab Bond vs. International Investors Gold | Ab Bond vs. Gold And Precious | Ab Bond vs. Europac Gold Fund | Ab Bond vs. Great West Goldman Sachs |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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