Correlation Between Economic Investment and Great West
Can any of the company-specific risk be diversified away by investing in both Economic Investment and Great West 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 Economic Investment and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Great West Lifeco, you can compare the effects of market volatilities on Economic Investment and Great West 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 Economic Investment with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Great West.
Diversification Opportunities for Economic Investment and Great West
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Economic and Great is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and Economic Investment 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 Economic Investment Trust are associated (or correlated) with Great West. 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 Lifeco has no effect on the direction of Economic Investment i.e., Economic Investment and Great West go up and down completely randomly.
Pair Corralation between Economic Investment and Great West
Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 1.78 times more return on investment than Great West. However, Economic Investment is 1.78 times more volatile than Great West Lifeco. It trades about 0.11 of its potential returns per unit of risk. Great West Lifeco is currently generating about 0.14 per unit of risk. If you would invest 12,680 in Economic Investment Trust on September 14, 2024 and sell it today you would earn a total of 3,800 from holding Economic Investment Trust or generate 29.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Economic Investment Trust vs. Great West Lifeco
Performance |
| Timeline |
| Economic Investment Trust |
| Great West Lifeco |
Economic Investment and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Great West
The main advantage of trading using opposite Economic Investment and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment position performs unexpectedly, Great West 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 will offset losses from the drop in Great West's long position.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
| Great West vs. Quisitive Technology Solutions | Great West vs. Ocumetics Technology Corp | Great West vs. Quipt Home Medical | Great West vs. Exco Technologies Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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