Correlation Between Great-west and Forum Real

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

By analyzing existing cross correlation between Great West Sp Mid and Forum Real Estate, you can compare the effects of market volatilities on Great-west and Forum Real 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 Forum Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west and Forum Real.

Diversification Opportunities for Great-west and Forum Real

0.84

Correlation Coefficient

Great-west  Forum Real

Very poor diversification

The 3 months correlation between Great-west and Forum is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Mid and Forum Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Real Estate 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 Mid are associated (or correlated) with Forum Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Real Estate has no effect on the direction of Great-west i.e., Great-west and Forum Real go up and down completely randomly.

Pair Corralation between Great-west and Forum Real

Assuming the 90 days horizon Great West Sp Mid is expected to generate 9.05 times more return on investment than Forum Real. However, Great-west is 9.05 times more volatile than Forum Real Estate. It trades about 0.17 of its potential returns per unit of risk. Forum Real Estate is currently generating about 0.31 per unit of risk. If you would invest  2,081  in Great West Sp Mid on September 3, 2024 and sell it today you would earn a total of  231.00  from holding Great West Sp Mid or generate 11.1% return on investment over 90 days.

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

Great West Sp Mid  vs.  Forum Real Estate

Great West Sp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Sp Mid are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Great-west may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Forum Real Estate

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Real Estate are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Forum Real 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 Forum Real

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

The idea behind Great West Sp Mid and Forum Real Estate 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.