Correlation Between Gmo Global and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Gmo Global and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Nasdaq-100(r).
Diversification Opportunities for Gmo Global and Nasdaq-100(r)
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Nasdaq-100(r) is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Gmo Global i.e., Gmo Global and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Gmo Global and Nasdaq-100(r)
Assuming the 90 days horizon Gmo Global Equity is expected to generate 0.26 times more return on investment than Nasdaq-100(r). However, Gmo Global Equity is 3.89 times less risky than Nasdaq-100(r). It trades about 0.27 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about -0.02 per unit of risk. If you would invest 2,842 in Gmo Global Equity on November 5, 2024 and sell it today you would earn a total of 94.00 from holding Gmo Global Equity or generate 3.31% 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. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Gmo Global Equity |
| Nasdaq 100 2x |
Gmo Global and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Nasdaq-100(r)
The main advantage of trading using opposite Gmo Global and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Gmo Global vs. Short Oil Gas | Gmo Global vs. Clearbridge Energy Mlp | Gmo Global vs. Thrivent Natural Resources | Gmo Global vs. Tortoise Energy Independence |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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