Correlation Between Gmo Resources and New Economy
Can any of the company-specific risk be diversified away by investing in both Gmo Resources and New Economy 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 Resources and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Resources and New Economy Fund, you can compare the effects of market volatilities on Gmo Resources and New Economy 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 Resources with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Resources and New Economy.
Diversification Opportunities for Gmo Resources and New Economy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gmo and New is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Resources and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Gmo Resources 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 Resources are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Gmo Resources i.e., Gmo Resources and New Economy go up and down completely randomly.
Pair Corralation between Gmo Resources and New Economy
Assuming the 90 days horizon Gmo Resources is expected to under-perform the New Economy. In addition to that, Gmo Resources is 1.36 times more volatile than New Economy Fund. It trades about -0.01 of its total potential returns per unit of risk. New Economy Fund is currently generating about 0.09 per unit of volatility. If you would invest 4,674 in New Economy Fund on August 24, 2024 and sell it today you would earn a total of 1,132 from holding New Economy Fund or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Gmo Resources vs. New Economy Fund
Performance |
| Timeline |
| Gmo Resources |
| New Economy Fund |
Gmo Resources and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Resources and New Economy
The main advantage of trading using opposite Gmo Resources and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Resources position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Gmo Resources vs. Rationalpier 88 Convertible | Gmo Resources vs. Absolute Convertible Arbitrage | Gmo Resources vs. Putnam Convertible Incm Gwth | Gmo Resources vs. Gabelli Convertible And |
| New Economy vs. World Energy Fund | New Economy vs. Gmo Resources | New Economy vs. Franklin Natural Resources | New Economy vs. Dreyfus Natural Resources |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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