Correlation Between Gmo Global and Gmo International
Can any of the company-specific risk be diversified away by investing in both Gmo Global and Gmo International 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 Global and Gmo International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Developed and Gmo International Equity, you can compare the effects of market volatilities on Gmo Global and Gmo International 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 Global with a short position of Gmo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Gmo International.
Diversification Opportunities for Gmo Global and Gmo International
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Gmo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Developed and Gmo International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo International Equity and Gmo Global 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 Global Developed are associated (or correlated) with Gmo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo International Equity has no effect on the direction of Gmo Global i.e., Gmo Global and Gmo International go up and down completely randomly.
Pair Corralation between Gmo Global and Gmo International
Assuming the 90 days horizon Gmo Global Developed is expected to generate 0.87 times more return on investment than Gmo International. However, Gmo Global Developed is 1.15 times less risky than Gmo International. It trades about 0.09 of its potential returns per unit of risk. Gmo International Equity is currently generating about 0.07 per unit of risk. If you would invest 2,324 in Gmo Global Developed on September 12, 2024 and sell it today you would earn a total of 368.00 from holding Gmo Global Developed or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Gmo Global Developed vs. Gmo International Equity
Performance |
| Timeline |
| Gmo Global Developed |
| Gmo International Equity |
Gmo Global and Gmo International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Gmo International
The main advantage of trading using opposite Gmo Global and Gmo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global position performs unexpectedly, Gmo International 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 International will offset losses from the drop in Gmo International's long position.| Gmo Global vs. Prudential Government Income | Gmo Global vs. Intermediate Government Bond | Gmo Global vs. Franklin Adjustable Government | Gmo Global vs. Inverse Government Long |
| Gmo International vs. Oakmark International Fund | Gmo International vs. Dodge International Stock | Gmo International vs. Oakmark International Fund | Gmo International vs. Oakmark International Fund |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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