Correlation Between Gmo Alternative and Kennedy Capital

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

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

Diversification Opportunities for Gmo Alternative and Kennedy Capital

-0.73

Correlation Coefficient

Gmo Alternative  Kennedy Capital

Pay attention - limited upside

The 3 months correlation between Gmo and Kennedy is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Alternative Allocation and Kennedy Capital Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Esg and Gmo Alternative 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 Gmo Alternative Allocation are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Esg has no effect on the direction of Gmo Alternative i.e., Gmo Alternative and Kennedy Capital go up and down completely randomly.

Pair Corralation between Gmo Alternative and Kennedy Capital

Assuming the 90 days horizon Gmo Alternative Allocation is expected to under-perform the Kennedy Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo Alternative Allocation is 3.01 times less risky than Kennedy Capital. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Kennedy Capital Esg is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,618  in Kennedy Capital Esg on September 19, 2024 and sell it today you would lose (22.00) from holding Kennedy Capital Esg or give up 1.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Gmo Alternative Allocation  vs.  Kennedy Capital Esg

Gmo Alternative Allo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kennedy Capital Esg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gmo Alternative and Kennedy Capital

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

The idea behind Gmo Alternative Allocation and Kennedy Capital Esg 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.