Correlation Between Gmo High and Oppenhmr Discovery
Can any of the company-specific risk be diversified away by investing in both Gmo High and Oppenhmr 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 Oppenhmr 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 Oppenhmr Discovery Mid, you can compare the effects of market volatilities on Gmo High and Oppenhmr 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 Oppenhmr Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Oppenhmr Discovery.
Diversification Opportunities for Gmo High and Oppenhmr Discovery
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GMO and Oppenhmr is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Oppenhmr Discovery Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenhmr Discovery Mid 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 Oppenhmr Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenhmr Discovery Mid has no effect on the direction of Gmo High i.e., Gmo High and Oppenhmr Discovery go up and down completely randomly.
Pair Corralation between Gmo High and Oppenhmr Discovery
Assuming the 90 days horizon Gmo High is expected to generate 8.61 times less return on investment than Oppenhmr Discovery. But when comparing it to its historical volatility, Gmo High Yield is 6.5 times less risky than Oppenhmr Discovery. It trades about 0.36 of its potential returns per unit of risk. Oppenhmr Discovery Mid is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 3,446 in Oppenhmr Discovery Mid on September 3, 2024 and sell it today you would earn a total of 415.00 from holding Oppenhmr Discovery Mid or generate 12.04% 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. Oppenhmr Discovery Mid
Performance |
| Timeline |
| Gmo High Yield |
| Oppenhmr Discovery Mid |
Gmo High and Oppenhmr Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Oppenhmr Discovery
The main advantage of trading using opposite Gmo High and Oppenhmr Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Oppenhmr 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 Oppenhmr Discovery will offset losses from the drop in Oppenhmr Discovery's long position.| Gmo High vs. Vanguard High Yield Corporate | Gmo High vs. Vanguard High Yield Porate | Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield |
| Oppenhmr Discovery vs. Gmo High Yield | Oppenhmr Discovery vs. Dreyfusstandish Global Fixed | Oppenhmr Discovery vs. Maryland Tax Free Bond | Oppenhmr Discovery vs. Calamos Dynamic Convertible |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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