Correlation Between Gmo Benchmark-free and Blackrock Gbl

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

By analyzing existing cross correlation between Gmo Benchmark Free Allocation and Blackrock Gbl Alloc, you can compare the effects of market volatilities on Gmo Benchmark-free and Blackrock Gbl 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 Benchmark-free with a short position of Blackrock Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Benchmark-free and Blackrock Gbl.

Diversification Opportunities for Gmo Benchmark-free and Blackrock Gbl

0.05

Correlation Coefficient

Gmo Benchmark-free  Blackrock Gbl

Significant diversification

The 3 months correlation between Gmo and Blackrock is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Benchmark Free Allocation and Blackrock Gbl Alloc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Gbl Alloc and Gmo Benchmark-free 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 Benchmark Free Allocation are associated (or correlated) with Blackrock Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Gbl Alloc has no effect on the direction of Gmo Benchmark-free i.e., Gmo Benchmark-free and Blackrock Gbl go up and down completely randomly.

Pair Corralation between Gmo Benchmark-free and Blackrock Gbl

Assuming the 90 days horizon Gmo Benchmark-free is expected to generate 1.04 times less return on investment than Blackrock Gbl. But when comparing it to its historical volatility, Gmo Benchmark Free Allocation is 1.28 times less risky than Blackrock Gbl. It trades about 0.08 of its potential returns per unit of risk. Blackrock Gbl Alloc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,678  in Blackrock Gbl Alloc on September 4, 2024 and sell it today you would earn a total of  306.00  from holding Blackrock Gbl Alloc or generate 18.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Gmo Benchmark Free Allocation  vs.  Blackrock Gbl Alloc

Gmo Benchmark Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Gbl Alloc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Gbl Alloc are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Gbl 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 Benchmark-free and Blackrock Gbl

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

The idea behind Gmo Benchmark Free Allocation and Blackrock Gbl Alloc 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.