Correlation Between Allianzgi Mid-cap and Gmo Global

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

By analyzing existing cross correlation between Allianzgi Mid Cap Fund and Gmo Global Equity, you can compare the effects of market volatilities on Allianzgi Mid-cap and Gmo Global 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 Allianzgi Mid-cap with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Mid-cap and Gmo Global.

Diversification Opportunities for Allianzgi Mid-cap and Gmo Global

0.17

Correlation Coefficient

Allianzgi Mid-cap  Gmo Global

Average diversification

The 3 months correlation between Allianzgi and Gmo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Mid Cap Fund and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Allianzgi Mid-cap 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 Allianzgi Mid Cap Fund are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Allianzgi Mid-cap i.e., Allianzgi Mid-cap and Gmo Global go up and down completely randomly.

Pair Corralation between Allianzgi Mid-cap and Gmo Global

Assuming the 90 days horizon Allianzgi Mid Cap Fund is expected to under-perform the Gmo Global. In addition to that, Allianzgi Mid-cap is 2.34 times more volatile than Gmo Global Equity. It trades about -0.07 of its total potential returns per unit of risk. Gmo Global Equity is currently generating about 0.1 per unit of volatility. If you would invest  2,813  in Gmo Global Equity on December 29, 2024 and sell it today you would earn a total of  124.00  from holding Gmo Global Equity or generate 4.41% return on investment over 90 days.

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

Allianzgi Mid Cap Fund  vs.  Gmo Global Equity

Allianzgi Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Mid Cap Fund 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.

Gmo Global Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allianzgi Mid-cap and Gmo Global

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

The idea behind Allianzgi Mid Cap Fund and Gmo Global Equity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.