Correlation Between Great-west Mfs and Great-west Large

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

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

Diversification Opportunities for Great-west Mfs and Great-west Large

-0.5

Correlation Coefficient

Great-west Mfs  Great-west Large

Very good diversification

The 3 months correlation between Great-west and Great-west is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Great West Mfs International and Great West Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Large and Great-west Mfs 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 Mfs International are associated (or correlated) with Great-west Large. 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 Large has no effect on the direction of Great-west Mfs i.e., Great-west Mfs and Great-west Large go up and down completely randomly.

Pair Corralation between Great-west Mfs and Great-west Large

Assuming the 90 days horizon Great West Mfs International is expected to under-perform the Great-west Large. In addition to that, Great-west Mfs is 1.26 times more volatile than Great West Large Cap. It trades about -0.07 of its total potential returns per unit of risk. Great West Large Cap is currently generating about 0.14 per unit of volatility. If you would invest  1,326  in Great West Large Cap on September 3, 2024 and sell it today you would earn a total of  75.00  from holding Great West Large Cap or generate 5.66% return on investment over 90 days.

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

Great West Mfs International  vs.  Great West Large Cap

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.

Great West Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Large Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west Large 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 Mfs and Great-west Large

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

The idea behind Great West Mfs International and Great West Large Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.