Correlation Between Hotchkis Wiley and Gmo Equity

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

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

Diversification Opportunities for Hotchkis Wiley and Gmo Equity

0.95

Correlation Coefficient

Hotchkis Wiley  Gmo Equity

Almost no diversification

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

Pair Corralation between Hotchkis Wiley and Gmo Equity

Assuming the 90 days horizon Hotchkis Wiley is expected to generate 2.0 times less return on investment than Gmo Equity. In addition to that, Hotchkis Wiley is 1.07 times more volatile than Gmo Equity Allocation. It trades about 0.09 of its total potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.2 per unit of volatility. If you would invest  1,195  in Gmo Equity Allocation on May 5, 2025 and sell it today you would earn a total of  118.00  from holding Gmo Equity Allocation or generate 9.87% return on investment over 90 days.

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

Hotchkis Wiley Value  vs.  Gmo Equity Allocation

Hotchkis Wiley Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotchkis Wiley Value are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Hotchkis Wiley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gmo Equity may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Hotchkis Wiley and Gmo Equity

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

The idea behind Hotchkis Wiley Value and Gmo Equity 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.