Correlation Between City National and Gmo High

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Can any of the company-specific risk be diversified away by investing in both City National and Gmo High 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 City National and Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City National Rochdale and Gmo High Yield, you can compare the effects of market volatilities on City National and Gmo High 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 City National with a short position of Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Gmo High.

Diversification Opportunities for City National and Gmo High

CityGmoDiversified AwayCityGmoDiversified Away100%
0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between City and Gmo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield and City National 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 City National Rochdale are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of City National i.e., City National and Gmo High go up and down completely randomly.

Pair Corralation between City National and Gmo High

Assuming the 90 days horizon City National Rochdale is expected to generate 0.34 times more return on investment than Gmo High. However, City National Rochdale is 2.92 times less risky than Gmo High. It trades about 0.67 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.22 per unit of risk. If you would invest  1,959  in City National Rochdale on November 30, 2024 and sell it today you would earn a total of  16.00  from holding City National Rochdale or generate 0.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

City National Rochdale  vs.  Gmo High Yield

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -0.50.00.51.01.5
JavaScript chart by amCharts 3.21.15RIMOX GHVIX
       Timeline  
City National Rochdale 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in City National Rochdale are ranked lower than 39 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, City National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb19.319.3519.419.4519.519.5519.619.6519.719.75
Gmo High Yield 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Gmo High Yield are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Gmo High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb16.616.6516.716.7516.816.8516.916.9517

City National and Gmo High Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.1-0.0771-0.0532-0.0293-0.005430.02190.04890.07720.140.36 1020304050
JavaScript chart by amCharts 3.21.15RIMOX GHVIX
       Returns  

Pair Trading with City National and Gmo High

The main advantage of trading using opposite City National and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National position performs unexpectedly, Gmo High 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 High will offset losses from the drop in Gmo High's long position.
The idea behind City National Rochdale and Gmo High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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