Correlation Between Great West and Great West

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

By analyzing existing cross correlation between Great West Sp Mid and Great West Multi Manager Large, you can compare the effects of market volatilities on Great West and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Great West.

Diversification Opportunities for Great West and Great West

0.72

Correlation Coefficient

Great West  Great West

Poor diversification

The 3 months correlation between Great and Great is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Mid and Great West Multi Manager Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Multi 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 Sp Mid are associated (or correlated) with Great West. 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 Multi has no effect on the direction of Great West i.e., Great West and Great West go up and down completely randomly.

Pair Corralation between Great West and Great West

Assuming the 90 days horizon Great West Sp Mid is expected to under-perform the Great West. But the mutual fund apears to be less risky and, when comparing its historical volatility, Great West Sp Mid is 1.07 times less risky than Great West. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Great West Multi Manager Large is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,246  in Great West Multi Manager Large on September 28, 2024 and sell it today you would lose (41.00) from holding Great West Multi Manager Large or give up 3.29% of portfolio value over 90 days.

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

Great West Sp Mid  vs.  Great West Multi Manager Large

Great West Sp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Great West Sp Mid has generated negative risk-adjusted returns adding no value to fund investors. 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.

Great West Multi

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Great West Multi Manager Large has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Great West and Great West

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

The idea behind Great West Sp Mid and Great West Multi Manager Large 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.