Correlation Between Gmo High and Focused International
Can any of the company-specific risk be diversified away by investing in both Gmo High and Focused International 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 High and Focused International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Focused International Growth, you can compare the effects of market volatilities on Gmo High and Focused International 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 High with a short position of Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Focused International.
Diversification Opportunities for Gmo High and Focused International
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gmo and Focused is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International and Gmo High 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 High Yield are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Gmo High i.e., Gmo High and Focused International go up and down completely randomly.
Pair Corralation between Gmo High and Focused International
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.2 times more return on investment than Focused International. However, Gmo High Yield is 4.94 times less risky than Focused International. It trades about 0.17 of its potential returns per unit of risk. Focused International Growth is currently generating about 0.02 per unit of risk. If you would invest 1,801 in Gmo High Yield on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Gmo High Yield or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gmo High Yield vs. Focused International Growth
Performance |
| Timeline |
| Gmo High Yield |
| Focused International |
Gmo High and Focused International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Focused International
The main advantage of trading using opposite Gmo High and Focused International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Focused International 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 Focused International will offset losses from the drop in Focused International's long position.| Gmo High vs. Artisan High Income | Gmo High vs. Blackrock High Yield | Gmo High vs. Pax High Yield | Gmo High vs. Msift High Yield |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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