Correlation Between Gmo Global and Stone Toro
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Stone Toro 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 Stone Toro 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 Stone Toro Market, you can compare the effects of market volatilities on Gmo Global and Stone Toro 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 Stone Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Stone Toro.
Diversification Opportunities for Gmo Global and Stone Toro
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gmo and Stone is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Stone Toro Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Toro Market 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 Stone Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Toro Market has no effect on the direction of Gmo Global i.e., Gmo Global and Stone Toro go up and down completely randomly.
Pair Corralation between Gmo Global and Stone Toro
Assuming the 90 days horizon Gmo Global Equity is expected to generate 3.28 times more return on investment than Stone Toro. However, Gmo Global is 3.28 times more volatile than Stone Toro Market. It trades about 0.05 of its potential returns per unit of risk. Stone Toro Market is currently generating about 0.08 per unit of risk. If you would invest 2,872 in Gmo Global Equity on September 3, 2024 and sell it today you would earn a total of 154.00 from holding Gmo Global Equity or generate 5.36% 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. Stone Toro Market
Performance |
| Timeline |
| Gmo Global Equity |
| Stone Toro Market |
Gmo Global and Stone Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Stone Toro
The main advantage of trading using opposite Gmo Global and Stone Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Stone Toro 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 Stone Toro will offset losses from the drop in Stone Toro's long position.| Gmo Global vs. Oppenheimer Gold Special | Gmo Global vs. Gamco Global Gold | Gmo Global vs. First Eagle Gold | Gmo Global vs. Franklin Gold Precious |
| Stone Toro vs. Gmo Global Equity | Stone Toro vs. The Fixed Income | Stone Toro vs. Locorr Dynamic Equity | Stone Toro vs. The Hartford Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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