Correlation Between Precious Metals and Great West

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

By analyzing existing cross correlation between Precious Metals And and Great West Lifetime 2050, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Great West.

Diversification Opportunities for Precious Metals and Great West

0.3

Correlation Coefficient

Precious Metals  Great West

Weak diversification

The 3 months correlation between Precious and Great is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Great West Lifetime 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime and Precious Metals 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 Precious Metals And 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 Lifetime has no effect on the direction of Precious Metals i.e., Precious Metals and Great West go up and down completely randomly.

Pair Corralation between Precious Metals and Great West

Assuming the 90 days horizon Precious Metals And is expected to generate 2.2 times more return on investment than Great West. However, Precious Metals is 2.2 times more volatile than Great West Lifetime 2050. It trades about 0.03 of its potential returns per unit of risk. Great West Lifetime 2050 is currently generating about 0.04 per unit of risk. If you would invest  1,805  in Precious Metals And on October 24, 2024 and sell it today you would earn a total of  332.00  from holding Precious Metals And or generate 18.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Precious Metals And  vs.  Great West Lifetime 2050

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Great West Lifetime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Lifetime 2050 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Precious Metals and Great West

The main advantage of trading using opposite Precious Metals and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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 Precious Metals And and Great West Lifetime 2050 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.