Correlation Between Great West and Powerof Canada

Can any of the company-specific risk be diversified away by investing in both Great West and Powerof Canada 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 Powerof Canada 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 Power of, you can compare the effects of market volatilities on Great West and Powerof Canada 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 Powerof Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Powerof Canada.

Diversification Opportunities for Great West and Powerof Canada

0.83

Correlation Coefficient

Great West  Powerof Canada

Very poor diversification

The 3 months correlation between Great and Powerof is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerof Canada 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 Powerof Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerof Canada has no effect on the direction of Great West i.e., Great West and Powerof Canada go up and down completely randomly.

Pair Corralation between Great West and Powerof Canada

If you would invest  3,030  in Power of on September 3, 2024 and sell it today you would earn a total of  332.00  from holding Power of or generate 10.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Great West Lifeco  vs.  Power of

Great West Lifeco

Risk-Adjusted Performance

0 of 100

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.

Powerof Canada

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Powerof Canada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Great West and Powerof Canada

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

The idea behind Great West Lifeco and Power of 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 Stocks Directory module to find actively traded stocks across global markets.