Correlation Between Great Wes and Great West

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

By analyzing existing cross correlation between Great Wes 515 and Great West 365, you can compare the effects of market volatilities on Great Wes 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 Great Wes with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wes and Great West.

Diversification Opportunities for Great Wes and Great West

-0.46

Correlation Coefficient

Great Wes  Great West

Very good diversification

The 3 months correlation between Great and Great is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Great Wes 515 and Great West 365 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West 365 and Great Wes 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 Great Wes 515 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 365 has no effect on the direction of Great Wes i.e., Great Wes and Great West go up and down completely randomly.

Pair Corralation between Great Wes and Great West

Assuming the 90 days trading horizon Great Wes 515 is expected to under-perform the Great West. But the preferred stock apears to be less risky and, when comparing its historical volatility, Great Wes 515 is 1.09 times less risky than Great West. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Great West 365 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Great West 365 on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Great West 365 or generate 6.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Great Wes 515  vs.  Great West 365

Great Wes 515

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Wes 515 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Great Wes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West 365

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West 365 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Great West may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Great Wes and Great West

The main advantage of trading using opposite Great Wes and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wes 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 Great Wes 515 and Great West 365 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.