Correlation Between Palmer Square and Gmo Small

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Palmer Square and Gmo Small 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 Palmer Square and Gmo Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palmer Square Income and Gmo Small Cap, you can compare the effects of market volatilities on Palmer Square and Gmo Small 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 Palmer Square with a short position of Gmo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palmer Square and Gmo Small.

Diversification Opportunities for Palmer Square and Gmo Small

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Palmer and Gmo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Palmer Square Income and Gmo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Small Cap and Palmer Square 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 Palmer Square Income are associated (or correlated) with Gmo Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Small Cap has no effect on the direction of Palmer Square i.e., Palmer Square and Gmo Small go up and down completely randomly.

Pair Corralation between Palmer Square and Gmo Small

Assuming the 90 days horizon Palmer Square Income is expected to generate 0.03 times more return on investment than Gmo Small. However, Palmer Square Income is 31.0 times less risky than Gmo Small. It trades about 0.37 of its potential returns per unit of risk. Gmo Small Cap is currently generating about -0.08 per unit of risk. If you would invest  1,009  in Palmer Square Income on September 23, 2024 and sell it today you would earn a total of  8.00  from holding Palmer Square Income or generate 0.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Palmer Square Income  vs.  Gmo Small Cap

 Performance 
       Timeline  
Palmer Square Income 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Income are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Palmer Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Gmo Small Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gmo Small Cap 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.

Palmer Square and Gmo Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palmer Square and Gmo Small

The main advantage of trading using opposite Palmer Square and Gmo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palmer Square position performs unexpectedly, Gmo Small 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 Small will offset losses from the drop in Gmo Small's long position.
The idea behind Palmer Square Income and Gmo Small Cap 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

Other Complementary Tools

Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing