Correlation Between Gmo International and Gmo Opportunistic

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

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

Diversification Opportunities for Gmo International and Gmo Opportunistic

-0.37

Correlation Coefficient

Gmo International  Gmo Opportunistic

Very good diversification

The 3 months correlation between Gmo and Gmo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gmo International Opportunisti and Gmo Opportunistic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Opportunistic Income and Gmo International 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 International Opportunistic are associated (or correlated) with Gmo Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Opportunistic Income has no effect on the direction of Gmo International i.e., Gmo International and Gmo Opportunistic go up and down completely randomly.

Pair Corralation between Gmo International and Gmo Opportunistic

Assuming the 90 days horizon Gmo International Opportunistic is expected to under-perform the Gmo Opportunistic. In addition to that, Gmo International is 16.98 times more volatile than Gmo Opportunistic Income. It trades about -0.26 of its total potential returns per unit of risk. Gmo Opportunistic Income is currently generating about -0.27 per unit of volatility. If you would invest  2,427  in Gmo Opportunistic Income on October 9, 2024 and sell it today you would lose (14.00) from holding Gmo Opportunistic Income or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gmo International Opportunisti  vs.  Gmo Opportunistic Income

Gmo International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo International Opportunistic has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gmo Opportunistic Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Opportunistic Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Gmo Opportunistic 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 International and Gmo Opportunistic

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

The idea behind Gmo International Opportunistic and Gmo Opportunistic Income 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.