Correlation Between Balanced Fund and Gmo Resources

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

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

Diversification Opportunities for Balanced Fund and Gmo Resources

0.9

Correlation Coefficient

Balanced Fund  Gmo Resources

Almost no diversification

The 3 months correlation between Balanced and Gmo is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Balanced Fund i.e., Balanced Fund and Gmo Resources go up and down completely randomly.

Pair Corralation between Balanced Fund and Gmo Resources

Assuming the 90 days horizon Balanced Fund is expected to generate 2.12 times less return on investment than Gmo Resources. But when comparing it to its historical volatility, Balanced Fund Retail is 3.28 times less risky than Gmo Resources. It trades about 0.26 of its potential returns per unit of risk. Gmo Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,585  in Gmo Resources on May 6, 2025 and sell it today you would earn a total of  244.00  from holding Gmo Resources or generate 15.39% return on investment over 90 days.

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

Balanced Fund Retail  vs.  Gmo Resources

Balanced Fund Retail

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Retail are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Balanced Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Gmo Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Resources are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gmo Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Balanced Fund and Gmo Resources

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

The idea behind Balanced Fund Retail and Gmo Resources 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.