Correlation Between Cref Inflation-linked and Gmo High
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Gmo High 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 Cref Inflation-linked and Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Gmo High Yield, you can compare the effects of market volatilities on Cref Inflation-linked and Gmo High 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 Cref Inflation-linked with a short position of Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Gmo High.
Diversification Opportunities for Cref Inflation-linked and Gmo High
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cref and Gmo is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Gmo High go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Gmo High
Assuming the 90 days trading horizon Cref Inflation Linked Bond is expected to generate 1.27 times more return on investment than Gmo High. However, Cref Inflation-linked is 1.27 times more volatile than Gmo High Yield. It trades about 0.27 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.34 per unit of risk. If you would invest 8,796 in Cref Inflation Linked Bond on June 3, 2025 and sell it today you would earn a total of 271.00 from holding Cref Inflation Linked Bond or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Gmo High Yield
Performance |
| Timeline |
| Cref Inflation Linked |
| Gmo High Yield |
Cref Inflation-linked and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Gmo High
The main advantage of trading using opposite Cref Inflation-linked and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked position performs unexpectedly, Gmo High 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 High will offset losses from the drop in Gmo High's long position.| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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