Correlation Between Gmo Small and Dreyfus Global
Can any of the company-specific risk be diversified away by investing in both Gmo Small and Dreyfus Global 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 Small and Dreyfus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Small Cap and Dreyfus Global Real, you can compare the effects of market volatilities on Gmo Small and Dreyfus Global 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 Small with a short position of Dreyfus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Dreyfus Global.
Diversification Opportunities for Gmo Small and Dreyfus Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Dreyfus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Dreyfus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Global Real and Gmo Small 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 Small Cap are associated (or correlated) with Dreyfus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Global Real has no effect on the direction of Gmo Small i.e., Gmo Small and Dreyfus Global go up and down completely randomly.
Pair Corralation between Gmo Small and Dreyfus Global
Assuming the 90 days horizon Gmo Small Cap is expected to generate 2.93 times more return on investment than Dreyfus Global. However, Gmo Small is 2.93 times more volatile than Dreyfus Global Real. It trades about 0.1 of its potential returns per unit of risk. Dreyfus Global Real is currently generating about 0.15 per unit of risk. If you would invest 2,075 in Gmo Small Cap on September 1, 2024 and sell it today you would earn a total of 642.00 from holding Gmo Small Cap or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Gmo Small Cap vs. Dreyfus Global Real
Performance |
| Timeline |
| Gmo Small Cap |
| Dreyfus Global Real |
Gmo Small and Dreyfus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Small and Dreyfus Global
The main advantage of trading using opposite Gmo Small and Dreyfus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small position performs unexpectedly, Dreyfus Global 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 Dreyfus Global will offset losses from the drop in Dreyfus Global's long position.| Gmo Small vs. Gmo E Plus | Gmo Small vs. Gmo Trust | Gmo Small vs. Gmo Treasury Fund | Gmo Small vs. Gmo Emerging Markets |
| Dreyfus Global vs. Dreyfus High Yield | Dreyfus Global vs. Dreyfusthe Boston Pany | Dreyfus Global vs. Dreyfus International Bond | Dreyfus Global vs. Dreyfus International Bond |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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