Correlation Between Vista Gold and Great West

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

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

Diversification Opportunities for Vista Gold and Great West

-0.62

Correlation Coefficient

Vista Gold  Great West

Excellent diversification

The 3 months correlation between Vista and Great is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vista Gold and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and Vista Gold 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 Vista Gold 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 Lifeco has no effect on the direction of Vista Gold i.e., Vista Gold and Great West go up and down completely randomly.

Pair Corralation between Vista Gold and Great West

Assuming the 90 days trading horizon Vista Gold is expected to under-perform the Great West. In addition to that, Vista Gold is 4.03 times more volatile than Great West Lifeco. It trades about -0.07 of its total potential returns per unit of risk. Great West Lifeco is currently generating about 0.07 per unit of volatility. If you would invest  4,554  in Great West Lifeco on October 9, 2024 and sell it today you would earn a total of  161.00  from holding Great West Lifeco or generate 3.54% return on investment over 90 days.

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

Vista Gold  vs.  Great West Lifeco

Vista Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vista Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Great West Lifeco

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifeco are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Great West is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vista Gold and Great West

The main advantage of trading using opposite Vista Gold and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Gold 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 Vista Gold and Great West Lifeco 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.