Correlation Between Gmo Global and One Choice

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

By analyzing existing cross correlation between Gmo Global Equity and One Choice 2050, you can compare the effects of market volatilities on Gmo Global and One Choice 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 Global with a short position of One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and One Choice.

Diversification Opportunities for Gmo Global and One Choice

0.47

Correlation Coefficient

Gmo Global  One Choice

Very weak diversification

The 3 months correlation between Gmo and One is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and One Choice 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2050 and Gmo Global 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 Global Equity are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2050 has no effect on the direction of Gmo Global i.e., Gmo Global and One Choice go up and down completely randomly.

Pair Corralation between Gmo Global and One Choice

Assuming the 90 days horizon Gmo Global is expected to generate 1.07 times less return on investment than One Choice. In addition to that, Gmo Global is 1.34 times more volatile than One Choice 2050. It trades about 0.08 of its total potential returns per unit of risk. One Choice 2050 is currently generating about 0.11 per unit of volatility. If you would invest  1,365  in One Choice 2050 on September 13, 2024 and sell it today you would earn a total of  221.00  from holding One Choice 2050 or generate 16.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Gmo Global Equity  vs.  One Choice 2050

Gmo Global Equity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Equity are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

One Choice 2050

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in One Choice 2050 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, One Choice 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 Global and One Choice

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

The idea behind Gmo Global Equity and One Choice 2050 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.