Correlation Between Gmo Global and American Funds
Can any of the company-specific risk be diversified away by investing in both Gmo Global and American Funds 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 American Funds 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 American Funds 2020, you can compare the effects of market volatilities on Gmo Global and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and American Funds.
Diversification Opportunities for Gmo Global and American Funds
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and American Funds 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2020 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2020 has no effect on the direction of Gmo Global i.e., Gmo Global and American Funds go up and down completely randomly.
Pair Corralation between Gmo Global and American Funds
Assuming the 90 days horizon Gmo Global Equity is expected to generate 1.89 times more return on investment than American Funds. However, Gmo Global is 1.89 times more volatile than American Funds 2020. It trades about 0.09 of its potential returns per unit of risk. American Funds 2020 is currently generating about 0.12 per unit of risk. If you would invest 2,453 in Gmo Global Equity on September 12, 2024 and sell it today you would earn a total of 592.00 from holding Gmo Global Equity or generate 24.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.7% |
| Values | Daily Returns |
Gmo Global Equity vs. American Funds 2020
Performance |
| Timeline |
| Gmo Global Equity |
| American Funds 2020 |
Gmo Global and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and American Funds
The main advantage of trading using opposite Gmo Global and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. SCOR PK | American Funds vs. Morningstar Unconstrained Allocation | American Funds vs. Thrivent High Yield | American Funds vs. Via Renewables |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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