Correlation Between Gmo Small and Basic Materials
Can any of the company-specific risk be diversified away by investing in both Gmo Small and Basic Materials 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 Small and Basic Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Small Cap and Basic Materials Ultrasector, you can compare the effects of market volatilities on Gmo Small and Basic Materials 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 Small with a short position of Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Basic Materials.
Diversification Opportunities for Gmo Small and Basic Materials
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Basic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Basic Materials Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials Ultr and Gmo Small 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 Small Cap are associated (or correlated) with Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials Ultr has no effect on the direction of Gmo Small i.e., Gmo Small and Basic Materials go up and down completely randomly.
Pair Corralation between Gmo Small and Basic Materials
Assuming the 90 days horizon Gmo Small Cap is expected to generate 0.7 times more return on investment than Basic Materials. However, Gmo Small Cap is 1.44 times less risky than Basic Materials. It trades about 0.05 of its potential returns per unit of risk. Basic Materials Ultrasector is currently generating about -0.05 per unit of risk. If you would invest 2,306 in Gmo Small Cap on August 30, 2025 and sell it today you would earn a total of 69.00 from holding Gmo Small Cap or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Small Cap vs. Basic Materials Ultrasector
Performance |
| Timeline |
| Gmo Small Cap |
| Basic Materials Ultr |
Gmo Small and Basic Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Small and Basic Materials
The main advantage of trading using opposite Gmo Small and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.| Gmo Small vs. Gmo E Plus | Gmo Small vs. Gmo Trust | Gmo Small vs. Gmo Treasury Fund | Gmo Small vs. Gmo Trust |
| Basic Materials vs. Live Oak Health | Basic Materials vs. Fidelity Advisor Health | Basic Materials vs. Vanguard Health Care | Basic Materials vs. Alphacentric Lifesci Healthcare |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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