Correlation Between Gmo High and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Gmo High and Energy Fund 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 High and Energy Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Energy Fund Class, you can compare the effects of market volatilities on Gmo High and Energy Fund 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 High with a short position of Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Energy Fund.
Diversification Opportunities for Gmo High and Energy Fund
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gmo and Energy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class and Gmo High 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 High Yield are associated (or correlated) with Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Gmo High i.e., Gmo High and Energy Fund go up and down completely randomly.
Pair Corralation between Gmo High and Energy Fund
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.16 times more return on investment than Energy Fund. However, Gmo High Yield is 6.37 times less risky than Energy Fund. It trades about 0.12 of its potential returns per unit of risk. Energy Fund Class is currently generating about -0.09 per unit of risk. If you would invest 1,679 in Gmo High Yield on December 2, 2024 and sell it today you would earn a total of 24.00 from holding Gmo High Yield or generate 1.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gmo High Yield vs. Energy Fund Class
Performance |
Timeline |
Gmo High Yield |
Energy Fund Class |
Gmo High and Energy Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gmo High and Energy Fund
The main advantage of trading using opposite Gmo High and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.Gmo High vs. Qs Large Cap | Gmo High vs. Profunds Large Cap Growth | Gmo High vs. Neiman Large Cap | Gmo High vs. Touchstone Large Cap |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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