Correlation Between Gmo Global and Ab Global

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

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

Diversification Opportunities for Gmo Global and Ab Global

0.97

Correlation Coefficient

Gmo Global  Ab Global

Almost no diversification

The 3 months correlation between Gmo and CABIX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Developed and Ab Global Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Risk and Gmo Global 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 Global Developed are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Risk has no effect on the direction of Gmo Global i.e., Gmo Global and Ab Global go up and down completely randomly.

Pair Corralation between Gmo Global and Ab Global

Assuming the 90 days horizon Gmo Global Developed is expected to generate 1.96 times more return on investment than Ab Global. However, Gmo Global is 1.96 times more volatile than Ab Global Risk. It trades about 0.17 of its potential returns per unit of risk. Ab Global Risk is currently generating about 0.17 per unit of risk. If you would invest  2,625  in Gmo Global Developed on May 7, 2025 and sell it today you would earn a total of  181.00  from holding Gmo Global Developed or generate 6.9% return on investment over 90 days.

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

Gmo Global Developed  vs.  Ab Global Risk

Gmo Global Developed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Developed 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 Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Ab Global Risk

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global Risk are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab Global 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 Global and Ab Global

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

The idea behind Gmo Global Developed and Ab Global Risk 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.