Correlation Between Great West and Virtus Nfj

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Can any of the company-specific risk be diversified away by investing in both Great West and Virtus Nfj 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 Virtus Nfj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Moderately Aggressive and Virtus Nfj Large Cap, you can compare the effects of market volatilities on Great West and Virtus Nfj 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 Virtus Nfj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Virtus Nfj.

Diversification Opportunities for Great West and Virtus Nfj

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Great and Virtus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Great West Moderately Aggressi and Virtus Nfj Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Nfj Large 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 Moderately Aggressive are associated (or correlated) with Virtus Nfj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Nfj Large has no effect on the direction of Great West i.e., Great West and Virtus Nfj go up and down completely randomly.

Pair Corralation between Great West and Virtus Nfj

Assuming the 90 days horizon Great West Moderately Aggressive is expected to generate 0.65 times more return on investment than Virtus Nfj. However, Great West Moderately Aggressive is 1.54 times less risky than Virtus Nfj. It trades about 0.18 of its potential returns per unit of risk. Virtus Nfj Large Cap is currently generating about -0.24 per unit of risk. If you would invest  729.00  in Great West Moderately Aggressive on September 18, 2024 and sell it today you would earn a total of  8.00  from holding Great West Moderately Aggressive or generate 1.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Great West Moderately Aggressi  vs.  Virtus Nfj Large Cap

 Performance 
       Timeline  
Great West Moderately 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Great West Moderately Aggressive are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Virtus Nfj Large 

Risk-Adjusted Performance

1 of 100

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

Great West and Virtus Nfj Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Great West and Virtus Nfj

The main advantage of trading using opposite Great West and Virtus Nfj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Virtus Nfj 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 Virtus Nfj will offset losses from the drop in Virtus Nfj's long position.
The idea behind Great West Moderately Aggressive and Virtus Nfj Large Cap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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