Correlation Between Gmo Core and Mairs Power
Can any of the company-specific risk be diversified away by investing in both Gmo Core and Mairs Power 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 Mairs Power 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 Mairs Power Balanced, you can compare the effects of market volatilities on Gmo Core and Mairs Power 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 Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Core and Mairs Power.
Diversification Opportunities for Gmo Core and Mairs Power
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gmo and Mairs is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Mairs Power Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Balanced 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 Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Balanced has no effect on the direction of Gmo Core i.e., Gmo Core and Mairs Power go up and down completely randomly.
Pair Corralation between Gmo Core and Mairs Power
Assuming the 90 days horizon Gmo Core is expected to generate 2.25 times less return on investment than Mairs Power. But when comparing it to its historical volatility, Gmo E Plus is 1.5 times less risky than Mairs Power. It trades about 0.1 of its potential returns per unit of risk. Mairs Power Balanced is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 10,431 in Mairs Power Balanced on August 29, 2024 and sell it today you would earn a total of 977.00 from holding Mairs Power Balanced or generate 9.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo E Plus vs. Mairs Power Balanced
Performance |
| Timeline |
| Gmo E Plus |
| Mairs Power Balanced |
Gmo Core and Mairs Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Core and Mairs Power
The main advantage of trading using opposite Gmo Core and Mairs Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Core position performs unexpectedly, Mairs Power 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 Mairs Power will offset losses from the drop in Mairs Power's long position.| Gmo Core vs. Wasatch Global Opportunities | Gmo Core vs. Mirova Global Green | Gmo Core vs. Scharf Global Opportunity | Gmo Core vs. T Rowe Price |
| Mairs Power vs. American Balanced Fund | Mairs Power vs. American Balanced Fund | Mairs Power vs. HUMANA INC | Mairs Power vs. Aquagold International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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