Correlation Between Small Cap and Great-west Loomis
Can any of the company-specific risk be diversified away by investing in both Small Cap and Great-west Loomis 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 Small Cap and Great-west Loomis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Great West Loomis Sayles, you can compare the effects of market volatilities on Small Cap and Great-west Loomis 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 Small Cap with a short position of Great-west Loomis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Great-west Loomis.
Diversification Opportunities for Small Cap and Great-west Loomis
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Great-west is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis and Small Cap 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 Small Cap Value are associated (or correlated) with Great-west Loomis. 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 Loomis has no effect on the direction of Small Cap i.e., Small Cap and Great-west Loomis go up and down completely randomly.
Pair Corralation between Small Cap and Great-west Loomis
Assuming the 90 days horizon Small Cap Value is expected to under-perform the Great-west Loomis. In addition to that, Small Cap is 1.6 times more volatile than Great West Loomis Sayles. It trades about -0.34 of its total potential returns per unit of risk. Great West Loomis Sayles is currently generating about -0.33 per unit of volatility. If you would invest 4,118 in Great West Loomis Sayles on October 12, 2024 and sell it today you would lose (293.00) from holding Great West Loomis Sayles or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value vs. Great West Loomis Sayles
Performance |
| Timeline |
| Small Cap Value |
| Great West Loomis |
Small Cap and Great-west Loomis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Great-west Loomis
The main advantage of trading using opposite Small Cap and Great-west Loomis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Great-west Loomis 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 Loomis will offset losses from the drop in Great-west Loomis' long position.| Small Cap vs. Value Fund Investor | Small Cap vs. Small Pany Fund | Small Cap vs. Mid Cap Value | Small Cap vs. Equity Income Fund |
| Great-west Loomis vs. Virtus High Yield | Great-west Loomis vs. Tiaa Cref High Yield Fund | Great-west Loomis vs. T Rowe Price | Great-west Loomis vs. Pace High Yield |
Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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