Correlation Between Gmo Core and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Gmo Core and Gmo Emerging 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 Gmo Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Gmo Core and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Core and Gmo Emerging.
Diversification Opportunities for Gmo Core and Gmo Emerging
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Gmo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Gmo Core i.e., Gmo Core and Gmo Emerging go up and down completely randomly.
Pair Corralation between Gmo Core and Gmo Emerging
Assuming the 90 days horizon Gmo Core is expected to generate 2.76 times less return on investment than Gmo Emerging. But when comparing it to its historical volatility, Gmo E Plus is 2.06 times less risky than Gmo Emerging. It trades about 0.03 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,152 in Gmo Emerging Markets on September 3, 2024 and sell it today you would earn a total of 323.00 from holding Gmo Emerging Markets or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo E Plus vs. Gmo Emerging Markets
Performance |
| Timeline |
| Gmo E Plus |
| Gmo Emerging Markets |
Gmo Core and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Core and Gmo Emerging
The main advantage of trading using opposite Gmo Core and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Core position performs unexpectedly, Gmo Emerging 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 Emerging will offset losses from the drop in Gmo Emerging's long position.| Gmo Core vs. Prudential Core Conservative | Gmo Core vs. Massmutual Premier Diversified | Gmo Core vs. Calvert Conservative Allocation | Gmo Core vs. Western Asset Diversified |
| Gmo Emerging vs. Sarofim Equity | Gmo Emerging vs. Cutler Equity | Gmo Emerging vs. Small Cap Equity | Gmo Emerging vs. Multimedia Portfolio Multimedia |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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