Correlation Between Gmo High and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Gmo High and Multisector Bond 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 Multisector Bond 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 Multisector Bond Sma, you can compare the effects of market volatilities on Gmo High and Multisector Bond 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 Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Multisector Bond.
Diversification Opportunities for Gmo High and Multisector Bond
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Multisector is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma 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 Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Gmo High i.e., Gmo High and Multisector Bond go up and down completely randomly.
Pair Corralation between Gmo High and Multisector Bond
Assuming the 90 days horizon Gmo High is expected to generate 1.18 times less return on investment than Multisector Bond. But when comparing it to its historical volatility, Gmo High Yield is 1.49 times less risky than Multisector Bond. It trades about 0.17 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,141 in Multisector Bond Sma on September 12, 2024 and sell it today you would earn a total of 235.00 from holding Multisector Bond Sma or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Multisector Bond Sma
Performance |
| Timeline |
| Gmo High Yield |
| Multisector Bond Sma |
Gmo High and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Multisector Bond
The main advantage of trading using opposite Gmo High and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond'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 |
| Multisector Bond vs. SCOR PK | Multisector Bond vs. Morningstar Unconstrained Allocation | Multisector Bond vs. Thrivent High Yield | Multisector Bond vs. Via Renewables |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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