Correlation Between James Balanced and Gmo Benchmark

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

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

Diversification Opportunities for James Balanced and Gmo Benchmark

0.04

Correlation Coefficient

James Balanced  Gmo Benchmark

Significant diversification

The 3 months correlation between James and Gmo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Gmo Benchmark Free Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Benchmark Free and James Balanced 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 James Balanced Golden are associated (or correlated) with Gmo Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Benchmark Free has no effect on the direction of James Balanced i.e., James Balanced and Gmo Benchmark go up and down completely randomly.

Pair Corralation between James Balanced and Gmo Benchmark

Assuming the 90 days horizon James Balanced Golden is expected to generate 1.05 times more return on investment than Gmo Benchmark. However, James Balanced is 1.05 times more volatile than Gmo Benchmark Free Allocation. It trades about 0.02 of its potential returns per unit of risk. Gmo Benchmark Free Allocation is currently generating about -0.03 per unit of risk. If you would invest  2,270  in James Balanced Golden on September 12, 2024 and sell it today you would earn a total of  9.00  from holding James Balanced Golden or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

James Balanced Golden  vs.  Gmo Benchmark Free Allocation

James Balanced Golden

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in James Balanced Golden are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, James Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with James Balanced and Gmo Benchmark

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

The idea behind James Balanced Golden and Gmo Benchmark Free Allocation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.