Correlation Between Gmo Resources and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Gmo Resources and Energy Fund 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 Energy Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Resources and Energy Fund Class, you can compare the effects of market volatilities on Gmo Resources and Energy Fund 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 Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Resources and Energy Fund.
Diversification Opportunities for Gmo Resources and Energy Fund
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and Energy is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Resources and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class 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 Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Gmo Resources i.e., Gmo Resources and Energy Fund go up and down completely randomly.
Pair Corralation between Gmo Resources and Energy Fund
Assuming the 90 days horizon Gmo Resources is expected to generate 6.81 times less return on investment than Energy Fund. In addition to that, Gmo Resources is 1.08 times more volatile than Energy Fund Class. It trades about 0.01 of its total potential returns per unit of risk. Energy Fund Class is currently generating about 0.08 per unit of volatility. If you would invest 19,945 in Energy Fund Class on August 31, 2024 and sell it today you would earn a total of 1,163 from holding Energy Fund Class or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Resources vs. Energy Fund Class
Performance |
| Timeline |
| Gmo Resources |
| Energy Fund Class |
Gmo Resources and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Resources and Energy Fund
The main advantage of trading using opposite Gmo Resources and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Resources position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Gmo Resources vs. Us Government Securities | Gmo Resources vs. John Hancock Government | Gmo Resources vs. Dunham Porategovernment Bond | Gmo Resources vs. Us Government Plus |
| Energy Fund vs. Alphacentric Lifesci Healthcare | Energy Fund vs. Blackrock Health Sciences | Energy Fund vs. Baillie Gifford Health | Energy Fund vs. Fidelity Advisor Health |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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