Correlation Between Fidelity Series and Gmo Trust

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

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

Diversification Opportunities for Fidelity Series and Gmo Trust

-0.59

Correlation Coefficient

Fidelity Series  Gmo Trust

Excellent diversification

The 3 months correlation between Fidelity and Gmo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Government and Gmo Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Trust and Fidelity Series 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 Fidelity Series Government are associated (or correlated) with Gmo Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Trust has no effect on the direction of Fidelity Series i.e., Fidelity Series and Gmo Trust go up and down completely randomly.

Pair Corralation between Fidelity Series and Gmo Trust

Assuming the 90 days horizon Fidelity Series Government is expected to under-perform the Gmo Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Series Government is 4.55 times less risky than Gmo Trust. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Gmo Trust is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,295  in Gmo Trust on September 12, 2024 and sell it today you would lose (48.00) from holding Gmo Trust or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity Series Government  vs.  Gmo Trust

Fidelity Series Gove

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Series Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gmo Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gmo Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Series and Gmo Trust

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

The idea behind Fidelity Series Government and Gmo Trust 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..