Correlation Between Great-west Real and Simt Real

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

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

Diversification Opportunities for Great-west Real and Simt Real

0.9

Correlation Coefficient

Great-west Real  Simt Real

Almost no diversification

The 3 months correlation between Great-west and Simt is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and Simt Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Real Estate and Great-west Real 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 Real Estate are associated (or correlated) with Simt Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Real Estate has no effect on the direction of Great-west Real i.e., Great-west Real and Simt Real go up and down completely randomly.

Pair Corralation between Great-west Real and Simt Real

Assuming the 90 days horizon Great-west Real is expected to generate 2.25 times less return on investment than Simt Real. In addition to that, Great-west Real is 1.05 times more volatile than Simt Real Estate. It trades about 0.01 of its total potential returns per unit of risk. Simt Real Estate is currently generating about 0.03 per unit of volatility. If you would invest  1,386  in Simt Real Estate on October 4, 2024 and sell it today you would earn a total of  214.00  from holding Simt Real Estate or generate 15.44% return on investment over 90 days.

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

Great West Real Estate  vs.  Simt Real Estate

Great West Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Simt Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Great West Real Estate and Simt Real Estate 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.