Correlation Between Chia and Gmo Emerging

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

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

Diversification Opportunities for Chia and Gmo Emerging

-0.47

Correlation Coefficient

Chia  Gmo Emerging

Very good diversification

The 3 months correlation between Chia and Gmo is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets and Chia 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 Chia are associated (or correlated) with Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Chia i.e., Chia and Gmo Emerging go up and down completely randomly.

Pair Corralation between Chia and Gmo Emerging

Assuming the 90 days trading horizon Chia is expected to generate 13.07 times more return on investment than Gmo Emerging. However, Chia is 13.07 times more volatile than Gmo Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about -0.26 per unit of risk. If you would invest  1,605  in Chia on October 11, 2024 and sell it today you would earn a total of  540.00  from holding Chia or generate 33.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Chia  vs.  Gmo Emerging Markets

Chia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gmo Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary 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 Chia and Gmo Emerging

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

The idea behind Chia and Gmo Emerging Markets 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.