Correlation Between Fundamental Large and Great-west Loomis

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Can any of the company-specific risk be diversified away by investing in both Fundamental Large and Great-west Loomis 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 Fundamental Large and Great-west Loomis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and Great West Loomis Sayles, you can compare the effects of market volatilities on Fundamental Large and Great-west Loomis 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 Fundamental Large with a short position of Great-west Loomis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Great-west Loomis.

Diversification Opportunities for Fundamental Large and Great-west Loomis

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fundamental and Great-west is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis and Fundamental Large 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 Fundamental Large Cap are associated (or correlated) with Great-west Loomis. 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 Loomis has no effect on the direction of Fundamental Large i.e., Fundamental Large and Great-west Loomis go up and down completely randomly.

Pair Corralation between Fundamental Large and Great-west Loomis

Assuming the 90 days horizon Fundamental Large Cap is expected to generate 0.78 times more return on investment than Great-west Loomis. However, Fundamental Large Cap is 1.28 times less risky than Great-west Loomis. It trades about 0.09 of its potential returns per unit of risk. Great West Loomis Sayles is currently generating about 0.03 per unit of risk. If you would invest  4,629  in Fundamental Large Cap on October 10, 2024 and sell it today you would earn a total of  2,084  from holding Fundamental Large Cap or generate 45.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fundamental Large Cap  vs.  Great West Loomis Sayles

 Performance 
       Timeline  
Fundamental Large Cap 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Large Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fundamental Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Great West Loomis 

Risk-Adjusted Performance

1 of 100

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

Fundamental Large and Great-west Loomis Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fundamental Large and Great-west Loomis

The main advantage of trading using opposite Fundamental Large and Great-west Loomis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large position performs unexpectedly, Great-west Loomis 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 Loomis will offset losses from the drop in Great-west Loomis' long position.
The idea behind Fundamental Large Cap and Great West Loomis Sayles 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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