Correlation Between Great West and Tarku Resources
Can any of the company-specific risk be diversified away by investing in both Great West and Tarku Resources 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 Tarku Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Tarku Resources, you can compare the effects of market volatilities on Great West and Tarku Resources 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 Tarku Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Tarku Resources.
Diversification Opportunities for Great West and Tarku Resources
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Tarku is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Tarku Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarku Resources 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 Lifeco are associated (or correlated) with Tarku Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarku Resources has no effect on the direction of Great West i.e., Great West and Tarku Resources go up and down completely randomly.
Pair Corralation between Great West and Tarku Resources
Assuming the 90 days trading horizon Great West Lifeco is expected to under-perform the Tarku Resources. But the preferred stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 21.17 times less risky than Tarku Resources. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Tarku Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Tarku Resources on September 12, 2024 and sell it today you would lose (0.50) from holding Tarku Resources or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Tarku Resources
Performance |
| Timeline |
| Great West Lifeco |
| Tarku Resources |
Great West and Tarku Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Tarku Resources
The main advantage of trading using opposite Great West and Tarku Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Tarku Resources 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 Tarku Resources will offset losses from the drop in Tarku Resources' long position.| Great West vs. Evertz Technologies Limited | Great West vs. Tree Island Steel | Great West vs. HPQ Silicon Resources | Great West vs. Cogeco Communications |
| Tarku Resources vs. Atrium Mortgage Investment | Tarku Resources vs. Capstone Mining Corp | Tarku Resources vs. Faction Investment Group | Tarku Resources vs. Brookfield Investments |
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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