Correlation Between Great West and Ivy E

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

Diversification Opportunities for Great West and Ivy E

0.69

Correlation Coefficient

Great West  Ivy E

Poor diversification

The 3 months correlation between Great and Ivy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Ivy E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy E Equity and Great West 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 Ivy E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy E Equity has no effect on the direction of Great West i.e., Great West and Ivy E go up and down completely randomly.

Pair Corralation between Great West and Ivy E

Assuming the 90 days horizon Great West is expected to generate 1.3 times less return on investment than Ivy E. But when comparing it to its historical volatility, Great West Goldman Sachs is 1.27 times less risky than Ivy E. It trades about 0.07 of its potential returns per unit of risk. Ivy E Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,506  in Ivy E Equity on September 24, 2024 and sell it today you would earn a total of  667.00  from holding Ivy E Equity or generate 44.29% 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.  Ivy E Equity

Great West Goldman

Risk-Adjusted Performance

0 of 100

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ivy E Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy E Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ivy E 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 and Ivy E

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

The idea behind Great West Goldman Sachs and Ivy E Equity 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.