Correlation Between Great-west Loomis and Disciplined Growth

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

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

Diversification Opportunities for Great-west Loomis and Disciplined Growth

0.79

Correlation Coefficient

Great-west Loomis  Disciplined Growth

Poor diversification

The 3 months correlation between Great-west and DISCIPLINED is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Disciplined Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disciplined Growth and Great-west Loomis 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 Loomis Sayles are associated (or correlated) with Disciplined Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disciplined Growth has no effect on the direction of Great-west Loomis i.e., Great-west Loomis and Disciplined Growth go up and down completely randomly.

Pair Corralation between Great-west Loomis and Disciplined Growth

Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 0.26 times more return on investment than Disciplined Growth. However, Great West Loomis Sayles is 3.91 times less risky than Disciplined Growth. It trades about -0.22 of its potential returns per unit of risk. Disciplined Growth Fund is currently generating about -0.17 per unit of risk. If you would invest  4,079  in Great West Loomis Sayles on December 12, 2024 and sell it today you would lose (517.00) from holding Great West Loomis Sayles or give up 12.67% of portfolio value over 90 days.

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

Great West Loomis Sayles  vs.  Disciplined Growth Fund

Great West Loomis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great West Loomis Sayles has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Disciplined Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Disciplined Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Great-west Loomis and Disciplined Growth

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

The idea behind Great West Loomis Sayles and Disciplined Growth 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.