Correlation Between Gmo Global and Oppenhmr Discovery

Can any of the company-specific risk be diversified away by investing in both Gmo Global and Oppenhmr Discovery 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 Oppenhmr Discovery 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 Oppenhmr Discovery Mid, you can compare the effects of market volatilities on Gmo Global and Oppenhmr Discovery 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 Oppenhmr Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Oppenhmr Discovery.

Diversification Opportunities for Gmo Global and Oppenhmr Discovery

-0.22

Correlation Coefficient

Gmo Global  Oppenhmr Discovery

Very good diversification

The 3 months correlation between Gmo and Oppenhmr is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Oppenhmr Discovery Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenhmr Discovery Mid 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 Oppenhmr Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenhmr Discovery Mid has no effect on the direction of Gmo Global i.e., Gmo Global and Oppenhmr Discovery go up and down completely randomly.

Pair Corralation between Gmo Global and Oppenhmr Discovery

Assuming the 90 days horizon Gmo Global Equity is expected to under-perform the Oppenhmr Discovery. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo Global Equity is 2.25 times less risky than Oppenhmr Discovery. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Oppenhmr Discovery Mid is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,423  in Oppenhmr Discovery Mid on September 22, 2024 and sell it today you would lose (5.00) from holding Oppenhmr Discovery Mid or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Gmo Global Equity  vs.  Oppenhmr Discovery Mid

Gmo Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Global Equity has generated negative risk-adjusted returns adding no value to fund investors. 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.

Oppenhmr Discovery Mid

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenhmr Discovery Mid are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Oppenhmr Discovery 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 Oppenhmr Discovery

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

The idea behind Gmo Global Equity and Oppenhmr Discovery Mid 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.