Correlation Between Great West and Great Wes
Can any of the company-specific risk be diversified away by investing in both Great West and Great Wes 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 Great Wes 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 Great Wes 515, you can compare the effects of market volatilities on Great West and Great Wes 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 Great Wes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Great Wes.
Diversification Opportunities for Great West and Great Wes
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and Great is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Great Wes 515 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wes 515 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 Great Wes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wes 515 has no effect on the direction of Great West i.e., Great West and Great Wes go up and down completely randomly.
Pair Corralation between Great West and Great Wes
Assuming the 90 days trading horizon Great West Lifeco is expected to under-perform the Great Wes. In addition to that, Great West is 1.11 times more volatile than Great Wes 515. It trades about -0.22 of its total potential returns per unit of risk. Great Wes 515 is currently generating about -0.2 per unit of volatility. If you would invest 2,230 in Great Wes 515 on August 28, 2024 and sell it today you would lose (89.00) from holding Great Wes 515 or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Great Wes 515
Performance |
| Timeline |
| Great West Lifeco |
| Great Wes 515 |
Great West and Great Wes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Great Wes
The main advantage of trading using opposite Great West and Great Wes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Great Wes 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 Wes will offset losses from the drop in Great Wes' long position.| Great West vs. Aya Gold Silver | Great West vs. Profound Medical Corp | Great West vs. Globex Mining Enterprises | Great West vs. Perseus Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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