Correlation Between High Yield and Gmo Us
Can any of the company-specific risk be diversified away by investing in both High Yield 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 High Yield and Gmo Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund and Gmo Equity Allocation, you can compare the effects of market volatilities on High Yield 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 High Yield with a short position of Gmo Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Gmo Us.
Diversification Opportunities for High Yield and Gmo Us
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and GMO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding High Yield 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 High Yield 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 High Yield Fund 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 High Yield i.e., High Yield and Gmo Us go up and down completely randomly.
Pair Corralation between High Yield and Gmo Us
Assuming the 90 days horizon High Yield is expected to generate 2.91 times less return on investment than Gmo Us. But when comparing it to its historical volatility, High Yield Fund is 6.56 times less risky than Gmo Us. It trades about 0.27 of its potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,432 in Gmo Equity Allocation on August 29, 2024 and sell it today you would earn a total of 38.00 from holding Gmo Equity Allocation or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund vs. Gmo Equity Allocation
Performance |
| Timeline |
| High Yield Fund |
| Gmo Equity Allocation |
High Yield and Gmo Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Gmo Us
The main advantage of trading using opposite High Yield and Gmo Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.| High Yield vs. Touchstone Sands Capital | High Yield vs. Mid Cap Growth | High Yield vs. Mid Cap Growth | High Yield vs. Sentinel Small Pany |
| Gmo Us vs. Wisdomtree Siegel Global | Gmo Us vs. Vanguard Global Credit | Gmo Us vs. Barings Global Floating | Gmo Us vs. Nuveen Global Real |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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