Correlation Between Gmo Emerging and Gmo Benchmark
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Gmo Benchmark 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 Emerging and Gmo Benchmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Emerging Markets and Gmo Benchmark Free Allocation, you can compare the effects of market volatilities on Gmo Emerging and Gmo Benchmark 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 Emerging with a short position of Gmo Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Gmo Benchmark.
Diversification Opportunities for Gmo Emerging and Gmo Benchmark
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gmo and Gmo is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Gmo Benchmark Free Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Benchmark Free and Gmo Emerging 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 Emerging Markets are associated (or correlated) with Gmo Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Benchmark Free has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Gmo Benchmark go up and down completely randomly.
Pair Corralation between Gmo Emerging and Gmo Benchmark
Assuming the 90 days horizon Gmo Emerging Markets is expected to generate 1.94 times more return on investment than Gmo Benchmark. However, Gmo Emerging is 1.94 times more volatile than Gmo Benchmark Free Allocation. It trades about 0.04 of its potential returns per unit of risk. Gmo Benchmark Free Allocation is currently generating about 0.08 per unit of risk. If you would invest 1,193 in Gmo Emerging Markets on September 3, 2024 and sell it today you would earn a total of 226.00 from holding Gmo Emerging Markets or generate 18.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Emerging Markets vs. Gmo Benchmark Free Allocation
Performance |
| Timeline |
| Gmo Emerging Markets |
| Gmo Benchmark Free |
Gmo Emerging and Gmo Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Gmo Benchmark
The main advantage of trading using opposite Gmo Emerging and Gmo Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Gmo Benchmark 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 Gmo Benchmark will offset losses from the drop in Gmo Benchmark's long position.| Gmo Emerging vs. Franklin Mutual Global | Gmo Emerging vs. Templeton Growth Fund | Gmo Emerging vs. Franklin Real Estate | Gmo Emerging vs. HUMANA INC |
| Gmo Benchmark vs. Siit Global Managed | Gmo Benchmark vs. Dreyfusstandish Global Fixed | Gmo Benchmark vs. Ab Global Bond | Gmo Benchmark vs. Commonwealth Global Fund |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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