Correlation Between Inflation-protected and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Inflation-protected 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 Inflation-protected and Gmo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Gmo Emerging Markets, you can compare the effects of market volatilities on Inflation-protected 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 Inflation-protected with a short position of Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Gmo Emerging.
Diversification Opportunities for Inflation-protected and Gmo Emerging
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inflation-protected and Gmo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund 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 Inflation-protected 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 Inflation Protected Bond Fund 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 Inflation-protected i.e., Inflation-protected and Gmo Emerging go up and down completely randomly.
Pair Corralation between Inflation-protected and Gmo Emerging
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 0.52 times more return on investment than Gmo Emerging. However, Inflation Protected Bond Fund is 1.91 times less risky than Gmo Emerging. It trades about 0.42 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about -0.14 per unit of risk. If you would invest 1,021 in Inflation Protected Bond Fund on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Inflation Protected Bond Fund or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Gmo Emerging Markets
Performance |
| Timeline |
| Inflation Protected |
| Gmo Emerging Markets |
Inflation-protected and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-protected and Gmo Emerging
The main advantage of trading using opposite Inflation-protected and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected 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.| Inflation-protected vs. Wells Fargo Advantage | Inflation-protected vs. Wells Fargo Advantage | Inflation-protected vs. Wells Fargo Advantage | Inflation-protected vs. Wells Fargo Ultra |
| Gmo Emerging vs. Ab Global Bond | Gmo Emerging vs. Artisan High Income | Gmo Emerging vs. Nuveen Arizona Municipal | Gmo Emerging vs. Inflation Protected Bond 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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