Correlation Between Locorr Longshort and Great-west Mfs

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

By analyzing existing cross correlation between Locorr Longshort Modities and Great West Mfs International, you can compare the effects of market volatilities on Locorr Longshort and Great-west Mfs 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 Locorr Longshort with a short position of Great-west Mfs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Longshort and Great-west Mfs.

Diversification Opportunities for Locorr Longshort and Great-west Mfs

0.8

Correlation Coefficient

Locorr Longshort  Great-west Mfs

Very poor diversification

The 3 months correlation between Locorr and Great-west is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Longshort Modities and Great West Mfs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Mfs and Locorr Longshort 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 Locorr Longshort Modities are associated (or correlated) with Great-west Mfs. 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 Mfs has no effect on the direction of Locorr Longshort i.e., Locorr Longshort and Great-west Mfs go up and down completely randomly.

Pair Corralation between Locorr Longshort and Great-west Mfs

Assuming the 90 days horizon Locorr Longshort Modities is expected to generate 0.36 times more return on investment than Great-west Mfs. However, Locorr Longshort Modities is 2.8 times less risky than Great-west Mfs. It trades about -0.13 of its potential returns per unit of risk. Great West Mfs International is currently generating about -0.06 per unit of risk. If you would invest  936.00  in Locorr Longshort Modities on September 4, 2024 and sell it today you would lose (21.00) from holding Locorr Longshort Modities or give up 2.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Locorr Longshort Modities  vs.  Great West Mfs International

Locorr Longshort Modities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Great West Mfs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Mfs International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Great-west Mfs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Locorr Longshort and Great-west Mfs

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

The idea behind Locorr Longshort Modities and Great West Mfs International 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.