Correlation Between Gmo Global and Smallcap Growth
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth Fund, you can compare the effects of market volatilities on Gmo Global and Smallcap Growth 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 Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Smallcap Growth.
Diversification Opportunities for Gmo Global and Smallcap Growth
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and SMALLCAP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Gmo Global i.e., Gmo Global and Smallcap Growth go up and down completely randomly.
Pair Corralation between Gmo Global and Smallcap Growth
Assuming the 90 days horizon Gmo Global is expected to generate 2.08 times less return on investment than Smallcap Growth. In addition to that, Gmo Global is 2.09 times more volatile than Smallcap Growth Fund. It trades about 0.04 of its total potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.18 per unit of volatility. If you would invest 1,063 in Smallcap Growth Fund on October 22, 2024 and sell it today you would earn a total of 32.00 from holding Smallcap Growth Fund or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Smallcap Growth Fund
Performance |
| Timeline |
| Gmo Global Equity |
| Smallcap Growth |
Gmo Global and Smallcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Smallcap Growth
The main advantage of trading using opposite Gmo Global and Smallcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Smallcap Growth 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 Smallcap Growth will offset losses from the drop in Smallcap Growth's long position.| Gmo Global vs. Ms Global Fixed | Gmo Global vs. Dreyfusstandish Global Fixed | Gmo Global vs. Morningstar Global Income | Gmo Global vs. Franklin Mutual Global |
| Smallcap Growth vs. Gmo Global Equity | Smallcap Growth vs. Wisdomtree Siegel Global | Smallcap Growth vs. Aqr Global Macro | Smallcap Growth vs. Rbc Bluebay Global |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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