Correlation Between Pace Large and Gmo Global

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

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

Diversification Opportunities for Pace Large and Gmo Global

0.77

Correlation Coefficient

Pace Large  Gmo Global

Poor diversification

The 3 months correlation between Pace and Gmo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Pace Large 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 Pace Large Value are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Pace Large i.e., Pace Large and Gmo Global go up and down completely randomly.

Pair Corralation between Pace Large and Gmo Global

Assuming the 90 days horizon Pace Large is expected to generate 1.1 times less return on investment than Gmo Global. In addition to that, Pace Large is 1.13 times more volatile than Gmo Global Equity. It trades about 0.14 of its total potential returns per unit of risk. Gmo Global Equity is currently generating about 0.17 per unit of volatility. If you would invest  2,944  in Gmo Global Equity on May 5, 2025 and sell it today you would earn a total of  211.00  from holding Gmo Global Equity or generate 7.17% return on investment over 90 days.

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

Pace Large Value  vs.  Gmo Global Equity

Pace Large Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Large Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Gmo Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gmo Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pace Large and Gmo Global

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

The idea behind Pace Large Value and Gmo Global Equity 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.