Correlation Between Small Pany and Gmo Asset

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

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

Diversification Opportunities for Small Pany and Gmo Asset

-0.62

Correlation Coefficient

Small Pany  Gmo Asset

Excellent diversification

The 3 months correlation between Small and Gmo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Pany 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 Small Pany Growth 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 Small Pany i.e., Small Pany and Gmo Asset go up and down completely randomly.

Pair Corralation between Small Pany and Gmo Asset

Assuming the 90 days horizon Small Pany Growth is expected to generate 2.03 times more return on investment than Gmo Asset. However, Small Pany is 2.03 times more volatile than Gmo Asset Allocation. It trades about 0.08 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  773.00  in Small Pany Growth on September 15, 2024 and sell it today you would earn a total of  895.00  from holding Small Pany Growth or generate 115.78% return on investment over 90 days.

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

Small Pany Growth  vs.  Gmo Asset Allocation

Small Pany Growth

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Growth are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Small Pany showed solid returns over the last few months and may actually be approaching a breakup point.

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 Small Pany and Gmo Asset

The main advantage of trading using opposite Small Pany and Gmo Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany 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 Small Pany Growth 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.