Correlation Between Federated Municipal and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Federated Municipal 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 Federated Municipal and Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Municipal High and Gmo Global Equity, you can compare the effects of market volatilities on Federated Municipal 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 Federated Municipal with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Municipal and Gmo Global.
Diversification Opportunities for Federated Municipal and Gmo Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Gmo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federated Municipal High 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 Federated 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 Federated Municipal High 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 Federated Municipal i.e., Federated Municipal and Gmo Global go up and down completely randomly.
Pair Corralation between Federated Municipal and Gmo Global
Assuming the 90 days horizon Federated Municipal is expected to generate 1.61 times less return on investment than Gmo Global. But when comparing it to its historical volatility, Federated Municipal High is 4.05 times less risky than Gmo Global. It trades about 0.39 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,311 in Gmo Global Equity on September 3, 2025 and sell it today you would earn a total of 240.00 from holding Gmo Global Equity or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Municipal High vs. Gmo Global Equity
Performance |
| Timeline |
| Federated Municipal High |
| Gmo Global Equity |
Federated Municipal and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Municipal and Gmo Global
The main advantage of trading using opposite Federated Municipal and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Municipal 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.| Federated Municipal vs. Ab E Opportunities | Federated Municipal vs. Arrow Managed Futures | Federated Municipal vs. Locorr Market Trend | Federated Municipal vs. Jp Morgan Smartretirement |
| Gmo Global vs. Federated Municipal High | Gmo Global vs. Arrow Managed Futures | Gmo Global vs. Ab E Opportunities | Gmo Global vs. Vanguard High Yield Tax Exempt |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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