Correlation Between Gmo Us and Small-midcap Dividend

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

By analyzing existing cross correlation between Gmo Equity Allocation and Small Midcap Dividend Income, you can compare the effects of market volatilities on Gmo Us and Small-midcap Dividend 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 Us with a short position of Small-midcap Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Us and Small-midcap Dividend.

Diversification Opportunities for Gmo Us and Small-midcap Dividend

0.61

Correlation Coefficient

Gmo Us  Small-midcap Dividend

Poor diversification

The 3 months correlation between Gmo and Small-midcap is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Equity Allocation and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend and Gmo Us 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 Equity Allocation are associated (or correlated) with Small-midcap Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Gmo Us i.e., Gmo Us and Small-midcap Dividend go up and down completely randomly.

Pair Corralation between Gmo Us and Small-midcap Dividend

Assuming the 90 days horizon Gmo Equity Allocation is expected to generate 0.81 times more return on investment than Small-midcap Dividend. However, Gmo Equity Allocation is 1.23 times less risky than Small-midcap Dividend. It trades about 0.19 of its potential returns per unit of risk. Small Midcap Dividend Income is currently generating about 0.06 per unit of risk. If you would invest  1,338  in Gmo Equity Allocation on July 27, 2025 and sell it today you would earn a total of  124.00  from holding Gmo Equity Allocation or generate 9.27% return on investment over 90 days.

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

Gmo Equity Allocation  vs.  Small Midcap Dividend Income

Gmo Equity Allocation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Equity Allocation are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gmo Us may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Small Midcap Dividend

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Small Midcap Dividend Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Small-midcap Dividend 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 Us and Small-midcap Dividend

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

The idea behind Gmo Equity Allocation and Small Midcap Dividend Income 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.