Correlation Between GMO Internet and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Colgate Palmolive 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 Internet and Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Colgate Palmolive, you can compare the effects of market volatilities on GMO Internet and Colgate Palmolive 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 Internet with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Colgate Palmolive.
Diversification Opportunities for GMO Internet and Colgate Palmolive
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between GMO and Colgate is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and GMO Internet 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 Internet are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of GMO Internet i.e., GMO Internet and Colgate Palmolive go up and down completely randomly.
Pair Corralation between GMO Internet and Colgate Palmolive
Assuming the 90 days horizon GMO Internet is expected to generate 2.2 times more return on investment than Colgate Palmolive. However, GMO Internet is 2.2 times more volatile than Colgate Palmolive. It trades about 0.04 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.05 per unit of risk. If you would invest 2,445 in GMO Internet on September 2, 2025 and sell it today you would earn a total of 105.00 from holding GMO Internet or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Colgate Palmolive
Performance |
| Timeline |
| GMO Internet |
| Colgate Palmolive |
GMO Internet and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Colgate Palmolive
The main advantage of trading using opposite GMO Internet and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| GMO Internet vs. Amkor Technology | GMO Internet vs. Asure Software | GMO Internet vs. NanoTech Entertainment | GMO Internet vs. Catalyst Metals Limited |
| Colgate Palmolive vs. Northstar Clean Technologies | Colgate Palmolive vs. China Clean Energy | Colgate Palmolive vs. Video Display | Colgate Palmolive vs. Grounded People Apparel |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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