Correlation Between Gmo Resources and Dimensional 2015

Can any of the company-specific risk be diversified away by investing in both Gmo Resources and Dimensional 2015 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 Resources and Dimensional 2015 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gmo Resources and Dimensional 2015 Target, you can compare the effects of market volatilities on Gmo Resources and Dimensional 2015 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 Resources with a short position of Dimensional 2015. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Resources and Dimensional 2015.

Diversification Opportunities for Gmo Resources and Dimensional 2015

0.52

Correlation Coefficient

Gmo Resources  Dimensional 2015

Very weak diversification

The 3 months correlation between Gmo and Dimensional is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Resources and Dimensional 2015 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2015 Target and Gmo Resources 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 Resources are associated (or correlated) with Dimensional 2015. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2015 Target has no effect on the direction of Gmo Resources i.e., Gmo Resources and Dimensional 2015 go up and down completely randomly.

Pair Corralation between Gmo Resources and Dimensional 2015

Assuming the 90 days horizon Gmo Resources is expected to generate 2.85 times more return on investment than Dimensional 2015. However, Gmo Resources is 2.85 times more volatile than Dimensional 2015 Target. It trades about -0.04 of its potential returns per unit of risk. Dimensional 2015 Target is currently generating about -0.12 per unit of risk. If you would invest  2,022  in Gmo Resources on September 16, 2024 and sell it today you would lose (72.00) from holding Gmo Resources or give up 3.56% of portfolio value over 90 days.

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

Gmo Resources  vs.  Dimensional 2015 Target

Gmo Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dimensional 2015 Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional 2015 Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dimensional 2015 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 Resources and Dimensional 2015

The main advantage of trading using opposite Gmo Resources and Dimensional 2015 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Resources position performs unexpectedly, Dimensional 2015 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 Dimensional 2015 will offset losses from the drop in Dimensional 2015's long position.

The idea behind Gmo Resources and Dimensional 2015 Target 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.