Correlation Between Gmo Small and Steward Funds
Can any of the company-specific risk be diversified away by investing in both Gmo Small and Steward Funds 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 Steward Funds 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 Steward Funds , you can compare the effects of market volatilities on Gmo Small and Steward Funds 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 Steward Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Steward Funds.
Diversification Opportunities for Gmo Small and Steward Funds
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gmo and Steward is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Steward Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Funds 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 Steward Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Funds has no effect on the direction of Gmo Small i.e., Gmo Small and Steward Funds go up and down completely randomly.
Pair Corralation between Gmo Small and Steward Funds
Assuming the 90 days horizon Gmo Small is expected to generate 1.17 times less return on investment than Steward Funds. In addition to that, Gmo Small is 1.55 times more volatile than Steward Funds . It trades about 0.21 of its total potential returns per unit of risk. Steward Funds is currently generating about 0.38 per unit of volatility. If you would invest 2,998 in Steward Funds on September 1, 2024 and sell it today you would earn a total of 248.00 from holding Steward Funds or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gmo Small Cap vs. Steward Funds
Performance |
| Timeline |
| Gmo Small Cap |
| Steward Funds |
Gmo Small and Steward Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Small and Steward Funds
The main advantage of trading using opposite Gmo Small and Steward Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small position performs unexpectedly, Steward Funds 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 Steward Funds will offset losses from the drop in Steward Funds' 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 |
| Steward Funds vs. Steward Small Mid Cap | Steward Funds vs. Steward Small Mid Cap | Steward Funds vs. Steward Ered Call | Steward Funds vs. Steward Ered Call |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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