Correlation Between Gmo Global and Columbia Emerging
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Columbia Emerging 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 Columbia Emerging 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 Columbia Emerging Markets, you can compare the effects of market volatilities on Gmo Global and Columbia Emerging 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 Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Columbia Emerging.
Diversification Opportunities for Gmo Global and Columbia Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Columbia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets 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 Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Gmo Global i.e., Gmo Global and Columbia Emerging go up and down completely randomly.
Pair Corralation between Gmo Global and Columbia Emerging
Assuming the 90 days horizon Gmo Global Equity is expected to generate 1.64 times more return on investment than Columbia Emerging. However, Gmo Global is 1.64 times more volatile than Columbia Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.13 per unit of risk. If you would invest 2,997 in Gmo Global Equity on September 13, 2024 and sell it today you would earn a total of 42.00 from holding Gmo Global Equity or generate 1.4% 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. Columbia Emerging Markets
Performance |
| Timeline |
| Gmo Global Equity |
| Columbia Emerging Markets |
Gmo Global and Columbia Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Columbia Emerging
The main advantage of trading using opposite Gmo Global and Columbia Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Columbia Emerging 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 Columbia Emerging will offset losses from the drop in Columbia Emerging's long position.| Gmo Global vs. Fidelity Sai Inflationfocused | Gmo Global vs. Blackrock Inflation Protected | Gmo Global vs. Lord Abbett Inflation | Gmo Global vs. Simt Multi Asset Inflation |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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