Correlation Between Gmo Asset and Plan Investment

Can any of the company-specific risk be diversified away by investing in both Gmo Asset and Plan Investment 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 Asset and Plan Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gmo Asset Allocation and Plan Investment, you can compare the effects of market volatilities on Gmo Asset and Plan Investment 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 Asset with a short position of Plan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Asset and Plan Investment.

Diversification Opportunities for Gmo Asset and Plan Investment

0.0

Correlation Coefficient

Gmo Asset  Plan Investment

Pay attention - limited upside

The 3 months correlation between Gmo and Plan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Asset Allocation and Plan Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plan Investment and Gmo Asset 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 Asset Allocation are associated (or correlated) with Plan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plan Investment has no effect on the direction of Gmo Asset i.e., Gmo Asset and Plan Investment go up and down completely randomly.

Pair Corralation between Gmo Asset and Plan Investment

If you would invest  1,782  in Gmo Asset Allocation on December 18, 2024 and sell it today you would earn a total of  75.00  from holding Gmo Asset Allocation or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Gmo Asset Allocation  vs.  Plan Investment

Gmo Asset Allocation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Asset Allocation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gmo Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Plan Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plan Investment has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Plan Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gmo Asset and Plan Investment

The main advantage of trading using opposite Gmo Asset and Plan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Asset position performs unexpectedly, Plan Investment 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 Plan Investment will offset losses from the drop in Plan Investment's long position.

The idea behind Gmo Asset Allocation and Plan Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.