Correlation Between Great West and James Balanced

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

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

Diversification Opportunities for Great West and James Balanced

0.58

Correlation Coefficient

Great West  James Balanced

Very weak diversification

The 3 months correlation between Great and James is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Small and James Balanced Golden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Balanced Golden and Great West 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 Sp Small are associated (or correlated) with James Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Balanced Golden has no effect on the direction of Great West i.e., Great West and James Balanced go up and down completely randomly.

Pair Corralation between Great West and James Balanced

Assuming the 90 days horizon Great West Sp Small is expected to generate 2.71 times more return on investment than James Balanced. However, Great West is 2.71 times more volatile than James Balanced Golden. It trades about 0.06 of its potential returns per unit of risk. James Balanced Golden is currently generating about 0.11 per unit of risk. If you would invest  624.00  in Great West Sp Small on September 13, 2024 and sell it today you would earn a total of  114.00  from holding Great West Sp Small or generate 18.27% return on investment over 90 days.

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

Great West Sp Small  vs.  James Balanced Golden

Great West Sp

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Sp Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Great West may actually be approaching a critical reversion point that can send shares even higher in January 2025.

James Balanced Golden

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days James Balanced Golden has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, James Balanced 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 and James Balanced

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

The idea behind Great West Sp Small and James Balanced Golden 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.