Correlation Between Great West and Great-west Moderately

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

By analyzing existing cross correlation between Great West Bond Index and Great West Moderately Servative, you can compare the effects of market volatilities on Great West and Great-west Moderately 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 Moderately. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Great-west Moderately.

Diversification Opportunities for Great West and Great-west Moderately

0.61

Correlation Coefficient

Great West  Great-west Moderately

Poor diversification

The 3 months correlation between Great and Great-west is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Great West Bond Index and Great West Moderately Servativ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Moderately 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 Bond Index are associated (or correlated) with Great-west Moderately. 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 Moderately has no effect on the direction of Great West i.e., Great West and Great-west Moderately go up and down completely randomly.

Pair Corralation between Great West and Great-west Moderately

Assuming the 90 days horizon Great West Bond Index is expected to under-perform the Great-west Moderately. But the mutual fund apears to be less risky and, when comparing its historical volatility, Great West Bond Index is 1.02 times less risky than Great-west Moderately. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Great West Moderately Servative is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  945.00  in Great West Moderately Servative on October 8, 2024 and sell it today you would earn a total of  26.00  from holding Great West Moderately Servative or generate 2.75% return on investment over 90 days.

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

Great West Bond Index  vs.  Great West Moderately Servativ

Great West Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Bond Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Great West Moderately

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Moderately Servative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Great-west Moderately 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 Moderately

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

The idea behind Great West Bond Index and Great West Moderately Servative 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.