Correlation Between Gmo High and Ab Discovery
Can any of the company-specific risk be diversified away by investing in both Gmo High and Ab Discovery 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 Ab Discovery 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 Ab Discovery Growth, you can compare the effects of market volatilities on Gmo High and Ab Discovery 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 Ab Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Ab Discovery.
Diversification Opportunities for Gmo High and Ab Discovery
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and CHCLX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Ab Discovery Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Discovery Growth 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 Ab Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Discovery Growth has no effect on the direction of Gmo High i.e., Gmo High and Ab Discovery go up and down completely randomly.
Pair Corralation between Gmo High and Ab Discovery
Assuming the 90 days horizon Gmo High is expected to generate 6.85 times less return on investment than Ab Discovery. But when comparing it to its historical volatility, Gmo High Yield is 7.19 times less risky than Ab Discovery. It trades about 0.36 of its potential returns per unit of risk. Ab Discovery Growth is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,160 in Ab Discovery Growth on September 2, 2024 and sell it today you would earn a total of 114.00 from holding Ab Discovery Growth or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Ab Discovery Growth
Performance |
| Timeline |
| Gmo High Yield |
| Ab Discovery Growth |
Gmo High and Ab Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Ab Discovery
The main advantage of trading using opposite Gmo High and Ab Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Ab Discovery 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 Ab Discovery will offset losses from the drop in Ab Discovery's long position.| Gmo High vs. Columbia Vertible Securities | Gmo High vs. Absolute Convertible Arbitrage | Gmo High vs. Virtus Convertible | Gmo High vs. Fidelity Sai Convertible |
| Ab Discovery vs. Ab Global E | Ab Discovery vs. Ab Global E | Ab Discovery vs. Ab Global E | Ab Discovery vs. Ab Minnesota Portfolio |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |