Correlation Between Great-west Lifetime and Tax-managed

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

By analyzing existing cross correlation between Great West Lifetime 2050 and Tax Managed Large Cap, you can compare the effects of market volatilities on Great-west Lifetime and Tax-managed 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 Lifetime with a short position of Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Lifetime and Tax-managed.

Diversification Opportunities for Great-west Lifetime and Tax-managed

0.73

Correlation Coefficient

Great-west Lifetime  Tax-managed

Poor diversification

The 3 months correlation between Great-west and Tax-managed is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifetime 2050 and Tax Managed Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Managed Large and Great-west Lifetime 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 Lifetime 2050 are associated (or correlated) with Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Managed Large has no effect on the direction of Great-west Lifetime i.e., Great-west Lifetime and Tax-managed go up and down completely randomly.

Pair Corralation between Great-west Lifetime and Tax-managed

Assuming the 90 days horizon Great-west Lifetime is expected to generate 3.92 times less return on investment than Tax-managed. In addition to that, Great-west Lifetime is 1.1 times more volatile than Tax Managed Large Cap. It trades about 0.02 of its total potential returns per unit of risk. Tax Managed Large Cap is currently generating about 0.09 per unit of volatility. If you would invest  8,390  in Tax Managed Large Cap on October 25, 2024 and sell it today you would earn a total of  355.00  from holding Tax Managed Large Cap or generate 4.23% return on investment over 90 days.

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

Great West Lifetime 2050  vs.  Tax Managed Large Cap

Great West Lifetime

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifetime 2050 are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tax Managed Large

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-managed 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 Lifetime and Tax-managed

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

The idea behind Great West Lifetime 2050 and Tax Managed 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.