Correlation Between Gold And and Gmo Us

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

By analyzing existing cross correlation between Gold And Precious and Gmo Small Cap, you can compare the effects of market volatilities on Gold And and Gmo Us 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 Gold And with a short position of Gmo Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold And and Gmo Us.

Diversification Opportunities for Gold And and Gmo Us

-0.23

Correlation Coefficient

Gold And  Gmo Us

Very good diversification

The 3 months correlation between Gold and Gmo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious 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 Gold And 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 Gold And Precious are associated (or correlated) with Gmo Us. 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 Gold And i.e., Gold And and Gmo Us go up and down completely randomly.

Pair Corralation between Gold And and Gmo Us

Assuming the 90 days horizon Gold And Precious is expected to generate 1.45 times more return on investment than Gmo Us. However, Gold And is 1.45 times more volatile than Gmo Small Cap. It trades about 0.27 of its potential returns per unit of risk. Gmo Small Cap is currently generating about -0.09 per unit of risk. If you would invest  1,143  in Gold And Precious on December 19, 2024 and sell it today you would earn a total of  327.00  from holding Gold And Precious or generate 28.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Gold And Precious  vs.  Gmo Small Cap

Gold And Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold And Precious are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold And showed solid returns over the last few months and may actually be approaching a breakup point.

Gmo Small Cap

Risk-Adjusted Performance

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.

Pair Trading with Gold And and Gmo Us

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

The idea behind Gold And Precious 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.