Correlation Between American Funds and Great-west Core
Can any of the company-specific risk be diversified away by investing in both American Funds and Great-west Core 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 American Funds and Great-west Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Conservative and Great West E Strategies, you can compare the effects of market volatilities on American Funds and Great-west Core 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 American Funds with a short position of Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Great-west Core.
Diversification Opportunities for American Funds and Great-west Core
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Great-west is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Conservative and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core and American Funds 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 American Funds Conservative are associated (or correlated) with Great-west Core. 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 Core has no effect on the direction of American Funds i.e., American Funds and Great-west Core go up and down completely randomly.
Pair Corralation between American Funds and Great-west Core
Assuming the 90 days horizon American Funds Conservative is expected to generate 1.35 times more return on investment than Great-west Core. However, American Funds is 1.35 times more volatile than Great West E Strategies. It trades about 0.1 of its potential returns per unit of risk. Great West E Strategies is currently generating about 0.05 per unit of risk. If you would invest 1,144 in American Funds Conservative on September 3, 2024 and sell it today you would earn a total of 231.00 from holding American Funds Conservative or generate 20.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Conservative vs. Great West E Strategies
Performance |
| Timeline |
| American Funds Conse |
| Great-west Core |
American Funds and Great-west Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Great-west Core
The main advantage of trading using opposite American Funds and Great-west Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Great-west Core 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 Core will offset losses from the drop in Great-west Core's long position.| American Funds vs. Janus Global Technology | American Funds vs. Pgim Jennison Technology | American Funds vs. Technology Ultrasector Profund | American Funds vs. Towpath Technology |
| Great-west Core vs. Prudential Core Conservative | Great-west Core vs. Aqr Diversified Arbitrage | Great-west Core vs. Evaluator Conservative Rms | Great-west Core vs. American Funds Conservative |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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