Correlation Between Gmo Trust and Us Government
Can any of the company-specific risk be diversified away by investing in both Gmo Trust and Us Government 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 Trust and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Trust and Us Government Securities, you can compare the effects of market volatilities on Gmo Trust and Us Government 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 Trust with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Trust and Us Government.
Diversification Opportunities for Gmo Trust and Us Government
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gmo and CGTAX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Trust and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Gmo Trust 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 Trust are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Gmo Trust i.e., Gmo Trust and Us Government go up and down completely randomly.
Pair Corralation between Gmo Trust and Us Government
Assuming the 90 days horizon Gmo Trust is expected to generate 1.89 times more return on investment than Us Government. However, Gmo Trust is 1.89 times more volatile than Us Government Securities. It trades about 0.07 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.01 per unit of risk. If you would invest 1,930 in Gmo Trust on August 25, 2024 and sell it today you would earn a total of 523.00 from holding Gmo Trust or generate 27.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 89.94% |
| Values | Daily Returns |
Gmo Trust vs. Us Government Securities
Performance |
| Timeline |
| Gmo Trust |
| Us Government Securities |
Gmo Trust and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Trust and Us Government
The main advantage of trading using opposite Gmo Trust and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Trust position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Gmo Trust vs. Us Government Securities | Gmo Trust vs. Fidelity Series Government | Gmo Trust vs. John Hancock Government | Gmo Trust vs. Franklin Adjustable Government |
| Us Government vs. Government Securities Fund | Us Government vs. John Hancock Government | Us Government vs. Short Term Government Fund | Us Government vs. Us Government Securities |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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