Correlation Between Gmo Global and Gmo Quality
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Gmo Quality 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 Global and Gmo Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Asset and Gmo Quality Fund, you can compare the effects of market volatilities on Gmo Global and Gmo Quality 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 Global with a short position of Gmo Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Gmo Quality.
Diversification Opportunities for Gmo Global and Gmo Quality
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and Gmo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Asset and Gmo Quality Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Quality Fund and Gmo Global 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 Global Asset are associated (or correlated) with Gmo Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Quality Fund has no effect on the direction of Gmo Global i.e., Gmo Global and Gmo Quality go up and down completely randomly.
Pair Corralation between Gmo Global and Gmo Quality
Assuming the 90 days horizon Gmo Global Asset is expected to generate 0.66 times more return on investment than Gmo Quality. However, Gmo Global Asset is 1.52 times less risky than Gmo Quality. It trades about 0.17 of its potential returns per unit of risk. Gmo Quality Fund is currently generating about 0.11 per unit of risk. If you would invest 3,377 in Gmo Global Asset on September 13, 2024 and sell it today you would earn a total of 42.00 from holding Gmo Global Asset or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Global Asset vs. Gmo Quality Fund
Performance |
| Timeline |
| Gmo Global Asset |
| Gmo Quality Fund |
Gmo Global and Gmo Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Gmo Quality
The main advantage of trading using opposite Gmo Global and Gmo Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Gmo Quality 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 Gmo Quality will offset losses from the drop in Gmo Quality's long position.| Gmo Global vs. Gmo E Plus | Gmo Global vs. Gmo Trust | Gmo Global vs. Gmo Treasury Fund | Gmo Global vs. Gmo Trust |
| Gmo Quality vs. Gmo E Plus | Gmo Quality vs. Gmo Trust | Gmo Quality vs. Gmo Treasury Fund | Gmo Quality vs. Gmo Trust |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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