Correlation Between GSR II and GSR II
Can any of the company-specific risk be diversified away by investing in both GSR II and GSR II 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 GSR II and GSR II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GSR II Meteora and GSR II Meteora, you can compare the effects of market volatilities on GSR II and GSR II 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 GSR II with a short position of GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSR II and GSR II.
Diversification Opportunities for GSR II and GSR II
Almost no diversification
The 3 months correlation between GSR and GSR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding GSR II Meteora and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora and GSR II 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 GSR II Meteora are associated (or correlated) with GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of GSR II i.e., GSR II and GSR II go up and down completely randomly.
Pair Corralation between GSR II and GSR II
Assuming the 90 days horizon GSR II is expected to generate 1.64 times less return on investment than GSR II. But when comparing it to its historical volatility, GSR II Meteora is 1.63 times less risky than GSR II. It trades about 0.12 of its potential returns per unit of risk. GSR II Meteora is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6.27 in GSR II Meteora on August 30, 2024 and sell it today you would earn a total of 7.73 from holding GSR II Meteora or generate 123.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.57% |
| Values | Daily Returns |
GSR II Meteora vs. GSR II Meteora
Performance |
| Timeline |
| GSR II Meteora |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| GSR II Meteora |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GSR II and GSR II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GSR II and GSR II
The main advantage of trading using opposite GSR II and GSR II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSR II position performs unexpectedly, GSR II 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 GSR II will offset losses from the drop in GSR II's long position.The idea behind GSR II Meteora and GSR II Meteora pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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