Correlation Between Gmo Small and Gmo Trust
Can any of the company-specific risk be diversified away by investing in both Gmo Small and Gmo Trust 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 Gmo Trust 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 Gmo Trust , you can compare the effects of market volatilities on Gmo Small and Gmo Trust 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 Gmo Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Gmo Trust.
Diversification Opportunities for Gmo Small and Gmo Trust
Poor diversification
The 3 months correlation between Gmo and Gmo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust 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 Gmo Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Trust has no effect on the direction of Gmo Small i.e., Gmo Small and Gmo Trust go up and down completely randomly.
Pair Corralation between Gmo Small and Gmo Trust
Assuming the 90 days horizon Gmo Small Cap is expected to generate 0.74 times more return on investment than Gmo Trust. However, Gmo Small Cap is 1.34 times less risky than Gmo Trust. It trades about -0.35 of its potential returns per unit of risk. Gmo Trust is currently generating about -0.35 per unit of risk. If you would invest 2,730 in Gmo Small Cap on September 27, 2024 and sell it today you would lose (290.00) from holding Gmo Small Cap or give up 10.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Small Cap vs. Gmo Trust
Performance |
| Timeline |
| Gmo Small Cap |
| Gmo Trust |
Gmo Small and Gmo Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Small and Gmo Trust
The main advantage of trading using opposite Gmo Small and Gmo Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small position performs unexpectedly, Gmo Trust 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 Trust will offset losses from the drop in Gmo Trust's long position.| Gmo Small vs. Gmo E Plus | Gmo Small vs. Gmo Trust | Gmo Small vs. Gmo Treasury Fund | Gmo Small vs. Gmo Trust |
| Gmo Trust vs. Gmo E Plus | Gmo Trust vs. Gmo Trust | Gmo Trust vs. Gmo Treasury Fund | Gmo Trust vs. Gmo Trust |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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