Correlation Between Great-west and Palmer Square

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

Diversification Opportunities for Great-west and Palmer Square

0.84

Correlation Coefficient

Great-west  Palmer Square

Very poor diversification

The 3 months correlation between Great-west and Palmer is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Mid and Palmer Square Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Income 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 Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Income has no effect on the direction of Great-west i.e., Great-west and Palmer Square go up and down completely randomly.

Pair Corralation between Great-west and Palmer Square

Assuming the 90 days horizon Great West Sp Mid is expected to generate 20.1 times more return on investment than Palmer Square. However, Great-west is 20.1 times more volatile than Palmer Square Income. It trades about 0.16 of its potential returns per unit of risk. Palmer Square Income is currently generating about 0.43 per unit of risk. If you would invest  928.00  in Great West Sp Mid on September 5, 2024 and sell it today you would earn a total of  102.00  from holding Great West Sp Mid or generate 10.99% return on investment over 90 days.

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

Great West Sp Mid  vs.  Palmer Square Income

Great West Sp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Sp Mid are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Great-west may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Palmer Square Income

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Income are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Palmer Square 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 Palmer Square

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

The idea behind Great West Sp Mid and Palmer Square Income 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.