Correlation Between Great-west Lifetime and Short Precious

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

By analyzing existing cross correlation between Great West Lifetime 2040 and Short Precious Metals, you can compare the effects of market volatilities on Great-west Lifetime and Short Precious 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-west Lifetime with a short position of Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Lifetime and Short Precious.

Diversification Opportunities for Great-west Lifetime and Short Precious

0.1

Correlation Coefficient

Great-west Lifetime  Short Precious

Average diversification

The 3 months correlation between Great-west and Short is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifetime 2040 and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals and Great-west Lifetime 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 West Lifetime 2040 are associated (or correlated) with Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Great-west Lifetime i.e., Great-west Lifetime and Short Precious go up and down completely randomly.

Pair Corralation between Great-west Lifetime and Short Precious

Assuming the 90 days horizon Great-west Lifetime is expected to generate 1.4 times less return on investment than Short Precious. But when comparing it to its historical volatility, Great West Lifetime 2040 is 4.37 times less risky than Short Precious. It trades about 0.29 of its potential returns per unit of risk. Short Precious Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  931.00  in Short Precious Metals on September 5, 2024 and sell it today you would earn a total of  38.00  from holding Short Precious Metals or generate 4.08% return on investment over 90 days.

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

Great West Lifetime 2040  vs.  Short Precious Metals

Great West Lifetime

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifetime 2040 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Great-west Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Great-west Lifetime and Short Precious

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

The idea behind Great West Lifetime 2040 and Short Precious Metals 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.