Correlation Between Gmo High and Vanguard Intermediate-ter
Can any of the company-specific risk be diversified away by investing in both Gmo High and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter 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 Vanguard Intermediate Term Bond, you can compare the effects of market volatilities on Gmo High and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Vanguard Intermediate-ter.
Diversification Opportunities for Gmo High and Vanguard Intermediate-ter
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Vanguard is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Vanguard Intermediate Term Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Gmo High i.e., Gmo High and Vanguard Intermediate-ter go up and down completely randomly.
Pair Corralation between Gmo High and Vanguard Intermediate-ter
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.56 times more return on investment than Vanguard Intermediate-ter. However, Gmo High Yield is 1.77 times less risky than Vanguard Intermediate-ter. It trades about 0.32 of its potential returns per unit of risk. Vanguard Intermediate Term Bond is currently generating about 0.04 per unit of risk. If you would invest 1,741 in Gmo High Yield on April 22, 2025 and sell it today you would earn a total of 16.00 from holding Gmo High Yield or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Vanguard Intermediate Term Bon
Performance |
| Timeline |
| Gmo High Yield |
| Vanguard Intermediate-ter |
Gmo High and Vanguard Intermediate-ter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Vanguard Intermediate-ter
The main advantage of trading using opposite Gmo High and Vanguard Intermediate-ter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Vanguard Intermediate-ter 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 Vanguard Intermediate-ter will offset losses from the drop in Vanguard Intermediate-ter's long position.| Gmo High vs. Qs Global Equity | Gmo High vs. Morgan Stanley Pathway | Gmo High vs. T Rowe Price | Gmo High vs. Multimedia Portfolio Multimedia |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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