Correlation Between Gmo Small and Guidepath Growth

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

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

Diversification Opportunities for Gmo Small and Guidepath Growth

0.95

Correlation Coefficient

Gmo Small  Guidepath Growth

Almost no diversification

The 3 months correlation between Gmo and Guidepath is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Guidepath Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Growth All and Gmo Small 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 Small Cap are associated (or correlated) with Guidepath Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Growth All has no effect on the direction of Gmo Small i.e., Gmo Small and Guidepath Growth go up and down completely randomly.

Pair Corralation between Gmo Small and Guidepath Growth

Assuming the 90 days horizon Gmo Small is expected to generate 1.02 times less return on investment than Guidepath Growth. In addition to that, Gmo Small is 1.68 times more volatile than Guidepath Growth Allocation. It trades about 0.18 of its total potential returns per unit of risk. Guidepath Growth Allocation is currently generating about 0.3 per unit of volatility. If you would invest  1,726  in Guidepath Growth Allocation on May 1, 2025 and sell it today you would earn a total of  238.00  from holding Guidepath Growth Allocation or generate 13.79% return on investment over 90 days.

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

Gmo Small Cap  vs.  Guidepath Growth Allocation

Gmo Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gmo Small showed solid returns over the last few months and may actually be approaching a breakup point.

Guidepath Growth All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Growth Allocation are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidepath Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gmo Small and Guidepath Growth

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

The idea behind Gmo Small Cap and Guidepath Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.