Correlation Between Gmo Emerging and Gmo High
Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Gmo High 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 High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Emerging Country and Gmo High Yield, you can compare the effects of market volatilities on Gmo Emerging and Gmo High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Gmo High.
Diversification Opportunities for Gmo Emerging and Gmo High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gmo and Gmo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Country and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield 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 Country are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Gmo High go up and down completely randomly.
Pair Corralation between Gmo Emerging and Gmo High
Assuming the 90 days horizon Gmo Emerging Country is expected to generate 1.14 times more return on investment than Gmo High. However, Gmo Emerging is 1.14 times more volatile than Gmo High Yield. It trades about 0.15 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.11 per unit of risk. If you would invest 1,563 in Gmo Emerging Country on August 24, 2024 and sell it today you would earn a total of 511.00 from holding Gmo Emerging Country or generate 32.69% 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 Country vs. Gmo High Yield
Performance |
| Timeline |
| Gmo Emerging Country |
| Gmo High Yield |
Gmo Emerging and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Emerging and Gmo High
The main advantage of trading using opposite Gmo Emerging and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Gmo High 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 High will offset losses from the drop in Gmo High's long position.| Gmo Emerging vs. Sit Emerging Markets | Gmo Emerging vs. HUMANA INC | Gmo Emerging vs. Aquagold International | Gmo Emerging vs. Barloworld Ltd ADR |
| Gmo High vs. Prudential High Yield | Gmo High vs. Parametric Modity Strategy | Gmo High vs. HUMANA INC | Gmo High vs. Aquagold International |
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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