Correlation Between Gmo Opportunistic and Microsoft

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

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

Diversification Opportunities for Gmo Opportunistic and Microsoft

0.57

Correlation Coefficient

Gmo Opportunistic  Microsoft

Very weak diversification

The 3 months correlation between Gmo and Microsoft is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Opportunistic Income and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Gmo Opportunistic 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 Opportunistic Income are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Gmo Opportunistic i.e., Gmo Opportunistic and Microsoft go up and down completely randomly.

Pair Corralation between Gmo Opportunistic and Microsoft

Assuming the 90 days horizon Gmo Opportunistic Income is expected to generate 0.18 times more return on investment than Microsoft. However, Gmo Opportunistic Income is 5.46 times less risky than Microsoft. It trades about -0.06 of its potential returns per unit of risk. Microsoft is currently generating about -0.13 per unit of risk. If you would invest  2,396  in Gmo Opportunistic Income on January 25, 2024 and sell it today you would lose (6.00) from holding Gmo Opportunistic Income or give up 0.25% of portfolio value over 90 days.

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

Gmo Opportunistic Income  vs.  Microsoft

Gmo Opportunistic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Opportunistic Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gmo Opportunistic and Microsoft

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

The idea behind Gmo Opportunistic Income and Microsoft 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.