Correlation Between Gmo E and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both Gmo E and Gmo Resources 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 E and Gmo Resources 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 Gmo Resources, you can compare the effects of market volatilities on Gmo E and Gmo Resources 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 E with a short position of Gmo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo E and Gmo Resources.
Diversification Opportunities for Gmo E and Gmo Resources
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Gmo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources and Gmo E 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 Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Gmo E i.e., Gmo E and Gmo Resources go up and down completely randomly.
Pair Corralation between Gmo E and Gmo Resources
Assuming the 90 days horizon Gmo E Plus is expected to generate 0.24 times more return on investment than Gmo Resources. However, Gmo E Plus is 4.12 times less risky than Gmo Resources. It trades about 0.09 of its potential returns per unit of risk. Gmo Resources is currently generating about -0.05 per unit of risk. If you would invest 1,723 in Gmo E Plus on August 31, 2024 and sell it today you would earn a total of 64.00 from holding Gmo E Plus or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Gmo E Plus vs. Gmo Resources
Performance |
| Timeline |
| Gmo E Plus |
| Gmo Resources |
Gmo E and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo E and Gmo Resources
The main advantage of trading using opposite Gmo E and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo E position performs unexpectedly, Gmo Resources 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 Gmo Resources will offset losses from the drop in Gmo Resources' long position.| Gmo E vs. Origin Emerging Markets | Gmo E vs. Transamerica Emerging Markets | Gmo E vs. Investec Emerging Markets | Gmo E vs. Pace International Emerging |
| Gmo Resources vs. T Rowe Price | Gmo Resources vs. Vanguard Materials Index | Gmo Resources vs. T Rowe Price | Gmo Resources vs. Gmo Trust |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Commodity Directory Find actively traded commodities issued by global exchanges |