Correlation Between Rational Strategic and Great-west Real

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

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

Diversification Opportunities for Rational Strategic and Great-west Real

0.6

Correlation Coefficient

Rational Strategic  Great-west Real

Poor diversification

The 3 months correlation between Rational and Great-west is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Rational Strategic Allocation and Great West Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Real and Rational Strategic 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 Rational Strategic Allocation are associated (or correlated) with Great-west Real. 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 Real has no effect on the direction of Rational Strategic i.e., Rational Strategic and Great-west Real go up and down completely randomly.

Pair Corralation between Rational Strategic and Great-west Real

Assuming the 90 days horizon Rational Strategic Allocation is expected to generate 1.08 times more return on investment than Great-west Real. However, Rational Strategic is 1.08 times more volatile than Great West Real Estate. It trades about -0.04 of its potential returns per unit of risk. Great West Real Estate is currently generating about -0.1 per unit of risk. If you would invest  906.00  in Rational Strategic Allocation on October 8, 2024 and sell it today you would lose (50.00) from holding Rational Strategic Allocation or give up 5.52% of portfolio value over 90 days.

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

Rational Strategic Allocation  vs.  Great West Real Estate

Rational Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest weak performance, the Fund's technical and fundamental 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 Rational Strategic and Great-west Real

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

The idea behind Rational Strategic Allocation and Great West 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.