Correlation Between Gmo International and Gmo Equity
Can any of the company-specific risk be diversified away by investing in both Gmo International and Gmo Equity 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 International and Gmo Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo International Equity and Gmo Equity Allocation, you can compare the effects of market volatilities on Gmo International and Gmo Equity 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 International with a short position of Gmo Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo International and Gmo Equity.
Diversification Opportunities for Gmo International and Gmo Equity
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gmo and Gmo is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Gmo International Equity 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 Gmo International 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 International Equity are associated (or correlated) with Gmo Equity. 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 Gmo International i.e., Gmo International and Gmo Equity go up and down completely randomly.
Pair Corralation between Gmo International and Gmo Equity
Assuming the 90 days horizon Gmo International is expected to generate 1.34 times less return on investment than Gmo Equity. In addition to that, Gmo International is 1.06 times more volatile than Gmo Equity Allocation. It trades about 0.18 of its total potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.25 per unit of volatility. If you would invest 1,246 in Gmo Equity Allocation on June 2, 2025 and sell it today you would earn a total of 138.00 from holding Gmo Equity Allocation or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo International Equity vs. Gmo Equity Allocation
Performance |
| Timeline |
| Gmo International Equity |
| Gmo Equity Allocation |
Gmo International and Gmo Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo International and Gmo Equity
The main advantage of trading using opposite Gmo International and Gmo Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo International position performs unexpectedly, Gmo Equity 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 Equity will offset losses from the drop in Gmo Equity's long position.| Gmo International vs. Ab All Market | Gmo International vs. Seafarer Overseas Growth | Gmo International vs. Ep Emerging Markets | Gmo International vs. Delaware Limited Term Diversified |
| Gmo Equity vs. Gmo E Plus | Gmo Equity vs. Gmo Trust | Gmo Equity vs. Gmo Treasury Fund | Gmo Equity vs. Gmo Trust |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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