Correlation Between Gmo E and Kennedy Capital

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

By analyzing existing cross correlation between Gmo E Plus and Kennedy Capital Esg, you can compare the effects of market volatilities on Gmo E and Kennedy Capital 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 E with a short position of Kennedy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo E and Kennedy Capital.

Diversification Opportunities for Gmo E and Kennedy Capital

-0.39

Correlation Coefficient

Gmo E  Kennedy Capital

Very good diversification

The 3 months correlation between Gmo and Kennedy is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gmo E Plus and Kennedy Capital Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Esg and Gmo E 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 E Plus are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Esg has no effect on the direction of Gmo E i.e., Gmo E and Kennedy Capital go up and down completely randomly.

Pair Corralation between Gmo E and Kennedy Capital

Assuming the 90 days horizon Gmo E Plus is expected to under-perform the Kennedy Capital. In addition to that, Gmo E is 1.02 times more volatile than Kennedy Capital Esg. It trades about -0.18 of its total potential returns per unit of risk. Kennedy Capital Esg is currently generating about -0.13 per unit of volatility. If you would invest  1,645  in Kennedy Capital Esg on September 19, 2024 and sell it today you would lose (49.00) from holding Kennedy Capital Esg or give up 2.98% of portfolio value over 90 days.

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

Gmo E Plus  vs.  Kennedy Capital Esg

Gmo E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kennedy Capital Esg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Capital Esg has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Kennedy Capital 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 E and Kennedy Capital

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

The idea behind Gmo E Plus and Kennedy Capital Esg 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.