Correlation Between Aggressive Growth and Great-west Multi-manager

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

By analyzing existing cross correlation between Aggressive Growth Portfolio and Great West Multi Manager Large, you can compare the effects of market volatilities on Aggressive Growth and Great-west Multi-manager 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 Aggressive Growth with a short position of Great-west Multi-manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Great-west Multi-manager.

Diversification Opportunities for Aggressive Growth and Great-west Multi-manager

0.49

Correlation Coefficient

Aggressive Growth  Great-west Multi-manager

Very weak diversification

The 3 months correlation between Aggressive and Great-west is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Portfolio and Great West Multi Manager Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Multi-manager and Aggressive Growth 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 Aggressive Growth Portfolio are associated (or correlated) with Great-west Multi-manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Multi-manager has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Great-west Multi-manager go up and down completely randomly.

Pair Corralation between Aggressive Growth and Great-west Multi-manager

Assuming the 90 days horizon Aggressive Growth Portfolio is expected to generate 1.18 times more return on investment than Great-west Multi-manager. However, Aggressive Growth is 1.18 times more volatile than Great West Multi Manager Large. It trades about 0.11 of its potential returns per unit of risk. Great West Multi Manager Large is currently generating about 0.07 per unit of risk. If you would invest  6,463  in Aggressive Growth Portfolio on October 5, 2024 and sell it today you would earn a total of  3,278  from holding Aggressive Growth Portfolio or generate 50.72% return on investment over 90 days.

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

Aggressive Growth Portfolio  vs.  Great West Multi Manager Large

Aggressive Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Portfolio are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Aggressive Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great-west Multi-manager

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aggressive Growth and Great-west Multi-manager

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

The idea behind Aggressive Growth Portfolio and Great West Multi Manager 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.