Correlation Between Gmo Core and American Independence
Can any of the company-specific risk be diversified away by investing in both Gmo Core and American Independence 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 American Independence 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 American Independence Kansas, you can compare the effects of market volatilities on Gmo Core and American Independence 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 American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Core and American Independence.
Diversification Opportunities for Gmo Core and American Independence
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and American is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence 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 American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Gmo Core i.e., Gmo Core and American Independence go up and down completely randomly.
Pair Corralation between Gmo Core and American Independence
Assuming the 90 days horizon Gmo E Plus is expected to generate 1.63 times more return on investment than American Independence. However, Gmo Core is 1.63 times more volatile than American Independence Kansas. It trades about 0.14 of its potential returns per unit of risk. American Independence Kansas is currently generating about 0.22 per unit of risk. If you would invest 1,778 in Gmo E Plus on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Gmo E Plus or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gmo E Plus vs. American Independence Kansas
Performance |
| Timeline |
| Gmo E Plus |
| American Independence |
Gmo Core and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Core and American Independence
The main advantage of trading using opposite Gmo Core and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Core position performs unexpectedly, American Independence 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 American Independence will offset losses from the drop in American Independence'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 |
| American Independence vs. Scharf Global Opportunity | American Independence vs. Fabxx | American Independence vs. Qs Large Cap | American Independence vs. T Rowe Price |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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