Correlation Between Great-west and Great-west Aggressive

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

By analyzing existing cross correlation between Great West Sp 500 and Great West Aggressive Profile, you can compare the effects of market volatilities on Great-west and Great-west Aggressive 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 Great-west Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west and Great-west Aggressive.

Diversification Opportunities for Great-west and Great-west Aggressive

0.72

Correlation Coefficient

Great-west  Great-west Aggressive

Poor diversification

The 3 months correlation between Great-west and Great-west is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp 500 and Great West Aggressive Profile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Aggressive 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 500 are associated (or correlated) with Great-west Aggressive. 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 Aggressive has no effect on the direction of Great-west i.e., Great-west and Great-west Aggressive go up and down completely randomly.

Pair Corralation between Great-west and Great-west Aggressive

Assuming the 90 days horizon Great West Sp 500 is expected to generate 1.05 times more return on investment than Great-west Aggressive. However, Great-west is 1.05 times more volatile than Great West Aggressive Profile. It trades about 0.11 of its potential returns per unit of risk. Great West Aggressive Profile is currently generating about 0.06 per unit of risk. If you would invest  2,525  in Great West Sp 500 on September 4, 2024 and sell it today you would earn a total of  1,370  from holding Great West Sp 500 or generate 54.26% return on investment over 90 days.

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

Great West Sp 500  vs.  Great West Aggressive Profile

Great West Sp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Sp 500 are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Great-west may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Great West Aggressive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Aggressive Profile are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west Aggressive 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 Great-west Aggressive

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

The idea behind Great West Sp 500 and Great West Aggressive Profile 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.