Correlation Between Great-west Inflation-protec and Growth Fund

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

By analyzing existing cross correlation between Great West Inflation Protected Securities and Growth Fund Of, you can compare the effects of market volatilities on Great-west Inflation-protec and Growth Fund 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 Inflation-protec with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Inflation-protec and Growth Fund.

Diversification Opportunities for Great-west Inflation-protec and Growth Fund

0.52

Correlation Coefficient

Great-west Inflation-protec  Growth Fund

Very weak diversification

The 3 months correlation between Great-west and Growth is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Great West Inflation Protected and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Great-west Inflation-protec 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 Inflation Protected Securities are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Great-west Inflation-protec i.e., Great-west Inflation-protec and Growth Fund go up and down completely randomly.

Pair Corralation between Great-west Inflation-protec and Growth Fund

Assuming the 90 days horizon Great-west Inflation-protec is expected to generate 4.96 times less return on investment than Growth Fund. But when comparing it to its historical volatility, Great West Inflation Protected Securities is 3.81 times less risky than Growth Fund. It trades about 0.05 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,306  in Growth Fund Of on October 22, 2024 and sell it today you would earn a total of  2,257  from holding Growth Fund Of or generate 42.54% return on investment over 90 days.

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

Great West Inflation Protected  vs.  Growth Fund Of

Great-west Inflation-protec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Inflation Protected Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Great-west Inflation-protec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growth Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Growth Fund 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 Inflation-protec and Growth Fund

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

The idea behind Great West Inflation Protected Securities and Growth Fund Of 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.