Correlation Between Enhanced and Great-west Templeton

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

By analyzing existing cross correlation between Enhanced Large Pany and Great West Templeton Global, you can compare the effects of market volatilities on Enhanced and Great-west Templeton 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 Enhanced with a short position of Great-west Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Great-west Templeton.

Diversification Opportunities for Enhanced and Great-west Templeton

-0.19

Correlation Coefficient

Enhanced  Great-west Templeton

Good diversification

The 3 months correlation between Enhanced and Great-west is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany and Great West Templeton Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Templeton and Enhanced 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 Enhanced Large Pany are associated (or correlated) with Great-west Templeton. 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 Templeton has no effect on the direction of Enhanced i.e., Enhanced and Great-west Templeton go up and down completely randomly.

Pair Corralation between Enhanced and Great-west Templeton

Assuming the 90 days horizon Enhanced Large Pany is expected to generate 1.73 times more return on investment than Great-west Templeton. However, Enhanced is 1.73 times more volatile than Great West Templeton Global. It trades about -0.15 of its potential returns per unit of risk. Great West Templeton Global is currently generating about -0.47 per unit of risk. If you would invest  1,548  in Enhanced Large Pany on October 12, 2024 and sell it today you would lose (46.00) from holding Enhanced Large Pany or give up 2.97% of portfolio value over 90 days.

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

Enhanced Large Pany  vs.  Great West Templeton Global

Enhanced Large Pany

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enhanced Large Pany are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Templeton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Templeton Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Great-west Templeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enhanced and Great-west Templeton

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

The idea behind Enhanced Large Pany and Great West Templeton Global 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.