Correlation Between GMO Internet and Trade Desk
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Trade Desk 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 Internet and Trade Desk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and The Trade Desk, you can compare the effects of market volatilities on GMO Internet and Trade Desk 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 Internet with a short position of Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Trade Desk.
Diversification Opportunities for GMO Internet and Trade Desk
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GMO and Trade is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk and GMO Internet 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 Internet are associated (or correlated) with Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of GMO Internet i.e., GMO Internet and Trade Desk go up and down completely randomly.
Pair Corralation between GMO Internet and Trade Desk
Assuming the 90 days horizon GMO Internet is expected to generate 0.67 times more return on investment than Trade Desk. However, GMO Internet is 1.49 times less risky than Trade Desk. It trades about 0.04 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.01 per unit of risk. If you would invest 1,610 in GMO Internet on October 25, 2024 and sell it today you would earn a total of 10.00 from holding GMO Internet or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. The Trade Desk
Performance |
| Timeline |
| GMO Internet |
| Trade Desk |
GMO Internet and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Trade Desk
The main advantage of trading using opposite GMO Internet and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.| GMO Internet vs. T Mobile | GMO Internet vs. China Mobile Limited | GMO Internet vs. Verizon Communications | GMO Internet vs. ATT Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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