Correlation Between Great-west International and Rmb Mendon

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

By analyzing existing cross correlation between Great West International Index and Rmb Mendon Financial, you can compare the effects of market volatilities on Great-west International and Rmb Mendon 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 International with a short position of Rmb Mendon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west International and Rmb Mendon.

Diversification Opportunities for Great-west International and Rmb Mendon

-0.2

Correlation Coefficient

Great-west International  Rmb Mendon

Good diversification

The 3 months correlation between Great-west and Rmb is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Great West International Index and Rmb Mendon Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Mendon Financial and Great-west International 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 International Index are associated (or correlated) with Rmb Mendon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Mendon Financial has no effect on the direction of Great-west International i.e., Great-west International and Rmb Mendon go up and down completely randomly.

Pair Corralation between Great-west International and Rmb Mendon

Assuming the 90 days horizon Great West International Index is expected to generate 0.63 times more return on investment than Rmb Mendon. However, Great West International Index is 1.58 times less risky than Rmb Mendon. It trades about 0.21 of its potential returns per unit of risk. Rmb Mendon Financial is currently generating about -0.06 per unit of risk. If you would invest  1,246  in Great West International Index on December 21, 2024 and sell it today you would earn a total of  137.00  from holding Great West International Index or generate 11.0% return on investment over 90 days.

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

Great West International Index  vs.  Rmb Mendon Financial

Great-west International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great West International Index are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Great-west International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rmb Mendon Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rmb Mendon Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Rmb Mendon 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 International and Rmb Mendon

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

The idea behind Great West International Index and Rmb Mendon Financial 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 Stocks Directory module to find actively traded stocks across global markets.