Correlation Between Gmo Global and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Mid Cap 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 Mid Cap 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 Mid Cap 15x Strategy, you can compare the effects of market volatilities on Gmo Global and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Mid Cap.
Diversification Opportunities for Gmo Global and Mid Cap
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gmo and Mid is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap 15x has no effect on the direction of Gmo Global i.e., Gmo Global and Mid Cap go up and down completely randomly.
Pair Corralation between Gmo Global and Mid Cap
Assuming the 90 days horizon Gmo Global Equity is expected to generate 0.4 times more return on investment than Mid Cap. However, Gmo Global Equity is 2.48 times less risky than Mid Cap. It trades about 0.03 of its potential returns per unit of risk. Mid Cap 15x Strategy is currently generating about -0.06 per unit of risk. If you would invest 3,036 in Gmo Global Equity on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Gmo Global Equity or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Equity vs. Mid Cap 15x Strategy
Performance |
| Timeline |
| Gmo Global Equity |
| Mid Cap 15x |
Gmo Global and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Mid Cap
The main advantage of trading using opposite Gmo Global and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap'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 |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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