Correlation Between Great West and Inpex Corp

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

By analyzing existing cross correlation between Great West Lifeco and Inpex Corp ADR, you can compare the effects of market volatilities on Great West and Inpex Corp 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 Great West with a short position of Inpex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Inpex Corp.

Diversification Opportunities for Great West and Inpex Corp

0.0

Correlation Coefficient

Great West  Inpex Corp

Pay attention - limited upside

The 3 months correlation between Great and Inpex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR and Great West 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 Great West Lifeco are associated (or correlated) with Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Great West i.e., Great West and Inpex Corp go up and down completely randomly.

Pair Corralation between Great West and Inpex Corp

If you would invest (100.00) in Great West Lifeco on November 29, 2024 and sell it today you would earn a total of  100.00  from holding Great West Lifeco or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Great West Lifeco  vs.  Inpex Corp ADR

Great West Lifeco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great West Lifeco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Inpex Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inpex Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Inpex Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Great West and Inpex Corp

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

The idea behind Great West Lifeco and Inpex Corp ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.