Correlation Between Gmo Global and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Federated Equity 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 Federated Equity 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 Federated Equity Income, you can compare the effects of market volatilities on Gmo Global and Federated Equity 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 Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Federated Equity.
Diversification Opportunities for Gmo Global and Federated Equity
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and FEDERATED is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income 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 Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Gmo Global i.e., Gmo Global and Federated Equity go up and down completely randomly.
Pair Corralation between Gmo Global and Federated Equity
Assuming the 90 days horizon Gmo Global is expected to generate 1.16 times less return on investment than Federated Equity. In addition to that, Gmo Global is 1.08 times more volatile than Federated Equity Income. It trades about 0.08 of its total potential returns per unit of risk. Federated Equity Income is currently generating about 0.1 per unit of volatility. If you would invest 2,028 in Federated Equity Income on August 29, 2024 and sell it today you would earn a total of 634.00 from holding Federated Equity Income or generate 31.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Federated Equity Income
Performance |
| Timeline |
| Gmo Global Equity |
| Federated Equity Income |
Gmo Global and Federated Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Federated Equity
The main advantage of trading using opposite Gmo Global and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Federated Equity 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 Federated Equity will offset losses from the drop in Federated Equity's long position.| Gmo Global vs. Matson Money Fixed | Gmo Global vs. Transamerica Funds | Gmo Global vs. T Rowe Price | Gmo Global vs. Plan Investment |
| Federated Equity vs. Iaadx | Federated Equity vs. T Rowe Price | Federated Equity vs. Acm Dynamic Opportunity | Federated Equity vs. Fa 529 Aggressive |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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