Correlation Between Gmo High and Gmo Core
Can any of the company-specific risk be diversified away by investing in both Gmo High and Gmo Core 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 Gmo High and Gmo Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Gmo E Plus, you can compare the effects of market volatilities on Gmo High and Gmo Core 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 Gmo High with a short position of Gmo Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Gmo Core.
Diversification Opportunities for Gmo High and Gmo Core
Poor diversification
The 3 months correlation between Gmo and Gmo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Gmo E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo E Plus and Gmo High 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 Gmo High Yield are associated (or correlated) with Gmo Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo E Plus has no effect on the direction of Gmo High i.e., Gmo High and Gmo Core go up and down completely randomly.
Pair Corralation between Gmo High and Gmo Core
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.89 times more return on investment than Gmo Core. However, Gmo High Yield is 1.12 times less risky than Gmo Core. It trades about 0.15 of its potential returns per unit of risk. Gmo E Plus is currently generating about 0.06 per unit of risk. If you would invest 1,787 in Gmo High Yield on September 9, 2025 and sell it today you would earn a total of 28.00 from holding Gmo High Yield or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Gmo E Plus
Performance |
| Timeline |
| Gmo High Yield |
| Gmo E Plus |
Gmo High and Gmo Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Gmo Core
The main advantage of trading using opposite Gmo High and Gmo Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Gmo Core 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 Core will offset losses from the drop in Gmo Core's long position.| Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield | Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield |
| Gmo Core vs. Dodge Income Fund | Gmo Core vs. Dodge Cox Income | Gmo Core vs. Strategic Advisers Fidelity | Gmo Core vs. Metropolitan West Total |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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