Correlation Between Sp Smallcap and Gmo Us
Can any of the company-specific risk be diversified away by investing in both Sp Smallcap and Gmo Us 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 Sp Smallcap and Gmo Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Smallcap Index and Gmo Equity Allocation, you can compare the effects of market volatilities on Sp Smallcap and Gmo Us 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 Sp Smallcap with a short position of Gmo Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and Gmo Us.
Diversification Opportunities for Sp Smallcap and Gmo Us
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SMLKX and Gmo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap Index 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 Sp Smallcap 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 Sp Smallcap Index are associated (or correlated) with Gmo Us. 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 Sp Smallcap i.e., Sp Smallcap and Gmo Us go up and down completely randomly.
Pair Corralation between Sp Smallcap and Gmo Us
Assuming the 90 days horizon Sp Smallcap Index is expected to generate 1.67 times more return on investment than Gmo Us. However, Sp Smallcap is 1.67 times more volatile than Gmo Equity Allocation. It trades about 0.23 of its potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.18 per unit of risk. If you would invest 2,280 in Sp Smallcap Index on August 29, 2024 and sell it today you would earn a total of 196.00 from holding Sp Smallcap Index or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sp Smallcap Index vs. Gmo Equity Allocation
Performance |
| Timeline |
| Sp Smallcap Index |
| Gmo Equity Allocation |
Sp Smallcap and Gmo Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Smallcap and Gmo Us
The main advantage of trading using opposite Sp Smallcap and Gmo Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Smallcap position performs unexpectedly, Gmo Us 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 Us will offset losses from the drop in Gmo Us' long position.| Sp Smallcap vs. Prudential Jennison International | Sp Smallcap vs. Fidelity New Markets | Sp Smallcap vs. Ohio Variable College |
| Gmo Us vs. Franklin Gold Precious | Gmo Us vs. Short Precious Metals | Gmo Us vs. First Eagle Gold | Gmo Us vs. Oppenheimer Gold Special |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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