Correlation Between Valic Company and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Valic Company and Gmo Global 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 Valic Company and Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and Gmo Global Equity, you can compare the effects of market volatilities on Valic Company and Gmo Global 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 Valic Company with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Gmo Global.
Diversification Opportunities for Valic Company and Gmo Global
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valic and Gmo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Valic Company 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 Valic Company I are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Valic Company i.e., Valic Company and Gmo Global go up and down completely randomly.
Pair Corralation between Valic Company and Gmo Global
Assuming the 90 days horizon Valic Company is expected to generate 1.57 times less return on investment than Gmo Global. But when comparing it to its historical volatility, Valic Company I is 3.61 times less risky than Gmo Global. It trades about 0.31 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,975 in Gmo Global Equity on September 2, 2024 and sell it today you would earn a total of 51.00 from holding Gmo Global Equity or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Gmo Global Equity
Performance |
| Timeline |
| Valic Company I |
| Gmo Global Equity |
Valic Company and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Gmo Global
The main advantage of trading using opposite Valic Company and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Gmo Global 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 Global will offset losses from the drop in Gmo Global's long position.| Valic Company vs. Mid Cap Index | Valic Company vs. Mid Cap Strategic | Valic Company vs. Stock Index Fund | Valic Company vs. Broad Cap Value |
| Gmo Global vs. Fidelity Advisor Diversified | Gmo Global vs. Huber Capital Diversified | Gmo Global vs. American Funds Conservative | Gmo Global vs. Adams Diversified Equity |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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