Correlation Between Natixis Sustainable and Gmo High
Can any of the company-specific risk be diversified away by investing in both Natixis Sustainable and Gmo High 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 Natixis Sustainable and Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natixis Sustainable Future and Gmo High Yield, you can compare the effects of market volatilities on Natixis Sustainable and Gmo High 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 Natixis Sustainable with a short position of Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natixis Sustainable and Gmo High.
Diversification Opportunities for Natixis Sustainable and Gmo High
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Natixis and Gmo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Natixis Sustainable Future and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield and Natixis Sustainable 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 Natixis Sustainable Future are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Natixis Sustainable i.e., Natixis Sustainable and Gmo High go up and down completely randomly.
Pair Corralation between Natixis Sustainable and Gmo High
Assuming the 90 days horizon Natixis Sustainable is expected to generate 1.87 times less return on investment than Gmo High. In addition to that, Natixis Sustainable is 2.77 times more volatile than Gmo High Yield. It trades about 0.03 of its total potential returns per unit of risk. Gmo High Yield is currently generating about 0.15 per unit of volatility. If you would invest 1,666 in Gmo High Yield on December 28, 2024 and sell it today you would earn a total of 29.00 from holding Gmo High Yield or generate 1.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Natixis Sustainable Future vs. Gmo High Yield
Performance |
Timeline |
Natixis Sustainable |
Gmo High Yield |
Natixis Sustainable and Gmo High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natixis Sustainable and Gmo High
The main advantage of trading using opposite Natixis Sustainable and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natixis Sustainable position performs unexpectedly, Gmo High 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 High will offset losses from the drop in Gmo High's long position.The idea behind Natixis Sustainable Future and Gmo High Yield 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.
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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