Correlation Between Great-west Multi-manager and Great West

Can any of the company-specific risk be diversified away by investing in both Great-west Multi-manager 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 Multi-manager 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 Multi Manager Large and Great West Aggressive Profile, you can compare the effects of market volatilities on Great-west Multi-manager 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 Multi-manager with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Multi-manager and Great West.

Diversification Opportunities for Great-west Multi-manager and Great West

0.25

Correlation Coefficient

Great-west Multi-manager  Great West

Modest diversification

The 3 months correlation between Great-west and Great is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Great West Multi Manager Large and Great West Aggressive Profile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Aggressive and Great-west Multi-manager 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 Multi Manager Large 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 Aggressive has no effect on the direction of Great-west Multi-manager i.e., Great-west Multi-manager and Great West go up and down completely randomly.

Pair Corralation between Great-west Multi-manager and Great West

Assuming the 90 days horizon Great West Multi Manager Large is expected to under-perform the Great West. In addition to that, Great-west Multi-manager is 1.87 times more volatile than Great West Aggressive Profile. It trades about -0.16 of its total potential returns per unit of risk. Great West Aggressive Profile is currently generating about 0.02 per unit of volatility. If you would invest  569.00  in Great West Aggressive Profile on December 24, 2024 and sell it today you would earn a total of  5.00  from holding Great West Aggressive Profile or generate 0.88% return on investment over 90 days.

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

Great West Multi Manager Large  vs.  Great West Aggressive Profile

Great-west Multi-manager

Risk-Adjusted Performance

Very Weak

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Great West Aggressive

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Aggressive Profile 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 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 Multi-manager and Great West

The main advantage of trading using opposite Great-west Multi-manager and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Multi-manager 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 Multi Manager Large and Great West Aggressive Profile 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.