Correlation Between Dimensional Retirement and Great West

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

By analyzing existing cross correlation between Dimensional Retirement Income and Great West Goldman Sachs, you can compare the effects of market volatilities on Dimensional Retirement and Great West 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 Dimensional Retirement with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Retirement and Great West.

Diversification Opportunities for Dimensional Retirement and Great West

0.58

Correlation Coefficient

Dimensional Retirement  Great West

Very weak diversification

The 3 months correlation between Dimensional and Great is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Retirement Income and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman and Dimensional Retirement 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 Dimensional Retirement Income are associated (or correlated) with Great West. 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 Goldman has no effect on the direction of Dimensional Retirement i.e., Dimensional Retirement and Great West go up and down completely randomly.

Pair Corralation between Dimensional Retirement and Great West

Assuming the 90 days horizon Dimensional Retirement Income is expected to under-perform the Great West. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dimensional Retirement Income is 13.58 times less risky than Great West. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Great West Goldman Sachs is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  986.00  in Great West Goldman Sachs on October 7, 2024 and sell it today you would lose (13.00) from holding Great West Goldman Sachs or give up 1.32% of portfolio value over 90 days.

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

Dimensional Retirement Income  vs.  Great West Goldman Sachs

Dimensional Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

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

Great West Goldman

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Goldman Sachs are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dimensional Retirement and Great West

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

The idea behind Dimensional Retirement Income and Great West Goldman Sachs 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.