Correlation Between Gmo Quality and Barings Active
Can any of the company-specific risk be diversified away by investing in both Gmo Quality and Barings Active 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 Quality and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Quality Fund and Barings Active Short, you can compare the effects of market volatilities on Gmo Quality and Barings Active 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 Quality with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Quality and Barings Active.
Diversification Opportunities for Gmo Quality and Barings Active
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gmo and Barings is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Quality Fund and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short and Gmo Quality 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 Quality Fund are associated (or correlated) with Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Gmo Quality i.e., Gmo Quality and Barings Active go up and down completely randomly.
Pair Corralation between Gmo Quality and Barings Active
Assuming the 90 days horizon Gmo Quality Fund is expected to generate 4.62 times more return on investment than Barings Active. However, Gmo Quality is 4.62 times more volatile than Barings Active Short. It trades about 0.1 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.15 per unit of risk. If you would invest 2,407 in Gmo Quality Fund on November 1, 2024 and sell it today you would earn a total of 1,005 from holding Gmo Quality Fund or generate 41.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Quality Fund vs. Barings Active Short
Performance |
| Timeline |
| Gmo Quality Fund |
| Barings Active Short |
Gmo Quality and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Quality and Barings Active
The main advantage of trading using opposite Gmo Quality and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Quality position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Gmo Quality vs. Gmo E Plus | Gmo Quality vs. Gmo Trust | Gmo Quality vs. Gmo Treasury Fund | Gmo Quality vs. Gmo Trust |
| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
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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