Correlation Between Great-west Goldman and Federated Mdt

Can any of the company-specific risk be diversified away by investing in both Great-west Goldman and Federated Mdt 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 Federated Mdt 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 Federated Mdt Large, you can compare the effects of market volatilities on Great-west Goldman and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Goldman and Federated Mdt.

Diversification Opportunities for Great-west Goldman and Federated Mdt

0.62

Correlation Coefficient

Great-west Goldman  Federated Mdt

Poor diversification

The 3 months correlation between Great-west and Federated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Great-west Goldman i.e., Great-west Goldman and Federated Mdt go up and down completely randomly.

Pair Corralation between Great-west Goldman and Federated Mdt

Assuming the 90 days horizon Great West Goldman Sachs is expected to generate 1.38 times more return on investment than Federated Mdt. However, Great-west Goldman is 1.38 times more volatile than Federated Mdt Large. It trades about 0.05 of its potential returns per unit of risk. Federated Mdt Large is currently generating about 0.05 per unit of risk. If you would invest  733.00  in Great West Goldman Sachs on October 9, 2024 and sell it today you would earn a total of  240.00  from holding Great West Goldman Sachs or generate 32.74% return on investment over 90 days.

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

Great West Goldman Sachs  vs.  Federated Mdt Large

Great West Goldman

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Goldman Sachs are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Federated Mdt Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Great-west Goldman and Federated Mdt

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

The idea behind Great West Goldman Sachs and Federated Mdt Large 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.