Correlation Between Gmo Core and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Gmo Core and Emerald Growth 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 Core and Emerald Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo E Plus and Emerald Growth Fund, you can compare the effects of market volatilities on Gmo Core and Emerald Growth 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 Core with a short position of Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Core and Emerald Growth.
Diversification Opportunities for Gmo Core and Emerald Growth
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gmo and Emerald is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth and Gmo Core 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 E Plus are associated (or correlated) with Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Gmo Core i.e., Gmo Core and Emerald Growth go up and down completely randomly.
Pair Corralation between Gmo Core and Emerald Growth
Assuming the 90 days horizon Gmo Core is expected to generate 3.35 times less return on investment than Emerald Growth. But when comparing it to its historical volatility, Gmo E Plus is 3.99 times less risky than Emerald Growth. It trades about 0.09 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,394 in Emerald Growth Fund on September 1, 2024 and sell it today you would earn a total of 469.00 from holding Emerald Growth Fund or generate 33.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo E Plus vs. Emerald Growth Fund
Performance |
| Timeline |
| Gmo E Plus |
| Emerald Growth |
Gmo Core and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Core and Emerald Growth
The main advantage of trading using opposite Gmo Core and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Core position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.| Gmo Core vs. Firsthand Alternative Energy | Gmo Core vs. Goehring Rozencwajg Resources | Gmo Core vs. Energy Services Fund | Gmo Core vs. Jennison Natural Resources |
| Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Banking And | Emerald Growth vs. Nuveen Small Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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