Correlation Between Avantis Us and Great-west Core

Can any of the company-specific risk be diversified away by investing in both Avantis Us and Great-west Core 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 Avantis Us and Great-west Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avantis Large Cap and Great West E Strategies, you can compare the effects of market volatilities on Avantis Us and Great-west Core 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 Avantis Us with a short position of Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Us and Great-west Core.

Diversification Opportunities for Avantis Us and Great-west Core

-0.28

Correlation Coefficient

Avantis Us  Great-west Core

Very good diversification

The 3 months correlation between Avantis and Great-west is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core and Avantis 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 Avantis Large Cap are associated (or correlated) with Great-west Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Core has no effect on the direction of Avantis Us i.e., Avantis Us and Great-west Core go up and down completely randomly.

Pair Corralation between Avantis Us and Great-west Core

Assuming the 90 days horizon Avantis Large Cap is expected to under-perform the Great-west Core. In addition to that, Avantis Us is 1.86 times more volatile than Great West E Strategies. It trades about -0.04 of its total potential returns per unit of risk. Great West E Strategies is currently generating about 0.11 per unit of volatility. If you would invest  972.00  in Great West E Strategies on December 21, 2024 and sell it today you would earn a total of  29.00  from holding Great West E Strategies or generate 2.98% return on investment over 90 days.

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

Avantis Large Cap  vs.  Great West E Strategies

Avantis Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avantis Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Avantis Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great-west Core

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West E Strategies are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Great-west Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avantis Us and Great-west Core

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

The idea behind Avantis Large Cap and Great West E Strategies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.