Correlation Between Great-west Goldman and Europac Gold

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

By analyzing existing cross correlation between Great West Goldman Sachs and Europac Gold Fund, you can compare the effects of market volatilities on Great-west Goldman and Europac Gold 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 Goldman with a short position of Europac Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Goldman and Europac Gold.

Diversification Opportunities for Great-west Goldman and Europac Gold

-0.21

Correlation Coefficient

Great-west Goldman  Europac Gold

Very good diversification

The 3 months correlation between Great-west and Europac is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Great-west Goldman 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 Goldman Sachs are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Great-west Goldman i.e., Great-west Goldman and Europac Gold go up and down completely randomly.

Pair Corralation between Great-west Goldman and Europac Gold

Assuming the 90 days horizon Great West Goldman Sachs is expected to under-perform the Europac Gold. In addition to that, Great-west Goldman is 1.48 times more volatile than Europac Gold Fund. It trades about -0.04 of its total potential returns per unit of risk. Europac Gold Fund is currently generating about 0.06 per unit of volatility. If you would invest  1,017  in Europac Gold Fund on November 29, 2024 and sell it today you would earn a total of  56.00  from holding Europac Gold Fund or generate 5.51% return on investment over 90 days.

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

Great West Goldman Sachs  vs.  Europac Gold Fund

Great West Goldman

Risk-Adjusted Performance

Very Weak

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

Europac Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Europac Gold Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europac Gold may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Great-west Goldman and Europac Gold

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

The idea behind Great West Goldman Sachs and Europac Gold Fund 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.