Correlation Between Gmo E and Brinker Capital

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

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

Diversification Opportunities for Gmo E and Brinker Capital

-0.32

Correlation Coefficient

Gmo E  Brinker Capital

Very good diversification

The 3 months correlation between Gmo and Brinker is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Brinker Capital Destinations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker Capital Dest and Gmo E 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 E Plus are associated (or correlated) with Brinker Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker Capital Dest has no effect on the direction of Gmo E i.e., Gmo E and Brinker Capital go up and down completely randomly.

Pair Corralation between Gmo E and Brinker Capital

Assuming the 90 days horizon Gmo E Plus is expected to under-perform the Brinker Capital. In addition to that, Gmo E is 1.85 times more volatile than Brinker Capital Destinations. It trades about -0.19 of its total potential returns per unit of risk. Brinker Capital Destinations is currently generating about 0.0 per unit of volatility. If you would invest  1,197  in Brinker Capital Destinations on September 23, 2024 and sell it today you would lose (1.00) from holding Brinker Capital Destinations or give up 0.08% of portfolio value over 90 days.

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

Gmo E Plus  vs.  Brinker Capital Destinations

Gmo E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brinker Capital Dest

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker Capital Destinations are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Brinker Capital 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 E and Brinker Capital

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

The idea behind Gmo E Plus and Brinker Capital Destinations 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.