Correlation Between Gmo Small and Salient Adaptive
Can any of the company-specific risk be diversified away by investing in both Gmo Small and Salient Adaptive 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 Salient Adaptive 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 Salient Adaptive Equity, you can compare the effects of market volatilities on Gmo Small and Salient Adaptive 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 Salient Adaptive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Salient Adaptive.
Diversification Opportunities for Gmo Small and Salient Adaptive
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Salient is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Salient Adaptive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Adaptive Equity 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 Salient Adaptive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Adaptive Equity has no effect on the direction of Gmo Small i.e., Gmo Small and Salient Adaptive go up and down completely randomly.
Pair Corralation between Gmo Small and Salient Adaptive
Assuming the 90 days horizon Gmo Small Cap is expected to under-perform the Salient Adaptive. In addition to that, Gmo Small is 4.91 times more volatile than Salient Adaptive Equity. It trades about -0.04 of its total potential returns per unit of risk. Salient Adaptive Equity is currently generating about 0.47 per unit of volatility. If you would invest 1,125 in Salient Adaptive Equity on September 15, 2024 and sell it today you would earn a total of 22.00 from holding Salient Adaptive Equity or generate 1.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Gmo Small Cap vs. Salient Adaptive Equity
Performance |
Timeline |
Gmo Small Cap |
Salient Adaptive Equity |
Gmo Small and Salient Adaptive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gmo Small and Salient Adaptive
The main advantage of trading using opposite Gmo Small and Salient Adaptive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small position performs unexpectedly, Salient Adaptive 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 Salient Adaptive will offset losses from the drop in Salient Adaptive's long position.Gmo Small vs. Gmo E Plus | Gmo Small vs. Gmo Trust | Gmo Small vs. Gmo Treasury Fund | Gmo Small vs. Gmo Trust |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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