Correlation Between Oklahoma Municipal and Gmo Equity
Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Gmo Equity 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 Oklahoma Municipal and Gmo Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oklahoma Municipal Fund and Gmo Equity Allocation, you can compare the effects of market volatilities on Oklahoma Municipal and Gmo Equity 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 Oklahoma Municipal with a short position of Gmo Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Gmo Equity.
Diversification Opportunities for Oklahoma Municipal and Gmo Equity
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oklahoma and Gmo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Gmo Equity Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Equity Allocation and Oklahoma Municipal 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 Oklahoma Municipal Fund are associated (or correlated) with Gmo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Equity Allocation has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Gmo Equity go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Gmo Equity
Assuming the 90 days horizon Oklahoma Municipal is expected to generate 3.17 times less return on investment than Gmo Equity. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 2.63 times less risky than Gmo Equity. It trades about 0.22 of its potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,409 in Gmo Equity Allocation on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Gmo Equity Allocation or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Gmo Equity Allocation
Performance |
| Timeline |
| Oklahoma Municipal |
| Gmo Equity Allocation |
Oklahoma Municipal and Gmo Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Gmo Equity
The main advantage of trading using opposite Oklahoma Municipal and Gmo Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Gmo Equity 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 Equity will offset losses from the drop in Gmo Equity's long position.| Oklahoma Municipal vs. Mesirow Financial Small | Oklahoma Municipal vs. Transamerica Financial Life | Oklahoma Municipal vs. 1919 Financial Services | Oklahoma Municipal vs. Angel Oak Financial |
| Gmo Equity vs. Blrc Sgy Mnp | Gmo Equity vs. Oklahoma Municipal Fund | Gmo Equity vs. Ishares Municipal Bond | Gmo Equity vs. Pace Municipal Fixed |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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