Correlation Between Gmo Global and Gmo E
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Gmo E 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 Gmo E 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 Gmo E Plus, you can compare the effects of market volatilities on Gmo Global and Gmo E 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 Gmo E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Gmo E.
Diversification Opportunities for Gmo Global and Gmo E
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Gmo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Gmo E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo E Plus 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 Gmo E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo E Plus has no effect on the direction of Gmo Global i.e., Gmo Global and Gmo E go up and down completely randomly.
Pair Corralation between Gmo Global and Gmo E
Assuming the 90 days horizon Gmo Global Equity is expected to generate 2.12 times more return on investment than Gmo E. However, Gmo Global is 2.12 times more volatile than Gmo E Plus. It trades about 0.08 of its potential returns per unit of risk. Gmo E Plus is currently generating about 0.05 per unit of risk. If you would invest 2,641 in Gmo Global Equity on September 12, 2024 and sell it today you would earn a total of 404.00 from holding Gmo Global Equity or generate 15.3% 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. Gmo E Plus
Performance |
| Timeline |
| Gmo Global Equity |
| Gmo E Plus |
Gmo Global and Gmo E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Gmo E
The main advantage of trading using opposite Gmo Global and Gmo E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Gmo E 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 E will offset losses from the drop in Gmo E's long position.| Gmo Global vs. Aig Government Money | Gmo Global vs. Franklin Adjustable Government | Gmo Global vs. Sit Government Securities | Gmo Global vs. Goldman Sachs Government |
| Gmo E vs. Gmo Trust | Gmo E vs. Gmo Small Cap | Gmo E vs. Gmo International Opportunistic | Gmo E vs. Gmo Quality Cyclicals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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