Correlation Between Gmo High and Strategic Income

Can any of the company-specific risk be diversified away by investing in both Gmo High and Strategic Income 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 Strategic Income 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 Strategic Income Portfolio, you can compare the effects of market volatilities on Gmo High and Strategic Income 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 Strategic Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Strategic Income.

Diversification Opportunities for Gmo High and Strategic Income

0.0

Correlation Coefficient

Gmo High  Strategic Income

Pay attention - limited upside

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

Pair Corralation between Gmo High and Strategic Income

If you would invest  1,663  in Gmo High Yield on December 29, 2024 and sell it today you would earn a total of  25.00  from holding Gmo High Yield or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Gmo High Yield  vs.  Strategic Income Portfolio

Gmo High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo High Yield are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Strategic Income Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Income Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Strategic Income 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 High and Strategic Income

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

The idea behind Gmo High Yield and Strategic Income Portfolio 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.