Correlation Between Great-west Securefoundation and Great-west Putnam

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

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

Diversification Opportunities for Great-west Securefoundation and Great-west Putnam

0.8

Correlation Coefficient

Great-west Securefoundation  Great-west Putnam

Very poor diversification

The 3 months correlation between Great-west and GREAT-WEST is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Great West Securefoundation Ba and Great West Putnam High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Putnam and Great-west Securefoundation 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 Securefoundation Balanced are associated (or correlated) with Great-west Putnam. 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 Putnam has no effect on the direction of Great-west Securefoundation i.e., Great-west Securefoundation and Great-west Putnam go up and down completely randomly.

Pair Corralation between Great-west Securefoundation and Great-west Putnam

Assuming the 90 days horizon Great West Securefoundation Balanced is expected to generate 2.68 times more return on investment than Great-west Putnam. However, Great-west Securefoundation is 2.68 times more volatile than Great West Putnam High. It trades about 0.11 of its potential returns per unit of risk. Great West Putnam High is currently generating about 0.28 per unit of risk. If you would invest  1,183  in Great West Securefoundation Balanced on September 4, 2024 and sell it today you would earn a total of  41.00  from holding Great West Securefoundation Balanced or generate 3.47% return on investment over 90 days.

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

Great West Securefoundation Ba  vs.  Great West Putnam High

Great-west Securefoundation

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Securefoundation Balanced are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west Securefoundation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Putnam

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Putnam High are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west Putnam 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 Securefoundation and Great-west Putnam

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

The idea behind Great West Securefoundation Balanced and Great West Putnam High 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.