Correlation Between Guidemark Smallmid and Gmo Asset

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

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

Diversification Opportunities for Guidemark Smallmid and Gmo Asset

-0.62

Correlation Coefficient

Guidemark Smallmid  Gmo Asset

Excellent diversification

The 3 months correlation between Guidemark and Gmo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Gmo Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Asset Allocation and Guidemark Smallmid 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 Guidemark Smallmid Cap are associated (or correlated) with Gmo Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Asset Allocation has no effect on the direction of Guidemark Smallmid i.e., Guidemark Smallmid and Gmo Asset go up and down completely randomly.

Pair Corralation between Guidemark Smallmid and Gmo Asset

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to generate 1.08 times more return on investment than Gmo Asset. However, Guidemark Smallmid is 1.08 times more volatile than Gmo Asset Allocation. It trades about 0.06 of its potential returns per unit of risk. Gmo Asset Allocation is currently generating about 0.0 per unit of risk. If you would invest  1,657  in Guidemark Smallmid Cap on September 15, 2024 and sell it today you would earn a total of  593.00  from holding Guidemark Smallmid Cap or generate 35.79% return on investment over 90 days.

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

Guidemark Smallmid Cap  vs.  Gmo Asset Allocation

Guidemark Smallmid Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gmo Asset Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Guidemark Smallmid and Gmo Asset

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

The idea behind Guidemark Smallmid Cap and Gmo Asset 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.