Correlation Between Great West and Transcontinental
Can any of the company-specific risk be diversified away by investing in both Great West and Transcontinental 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 Transcontinental 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 Transcontinental, you can compare the effects of market volatilities on Great West and Transcontinental 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 Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Transcontinental.
Diversification Opportunities for Great West and Transcontinental
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Transcontinental is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Great West i.e., Great West and Transcontinental go up and down completely randomly.
Pair Corralation between Great West and Transcontinental
Assuming the 90 days trading horizon Great West Lifeco is expected to under-perform the Transcontinental. But the stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 1.73 times less risky than Transcontinental. The stock trades about -0.13 of its potential returns per unit of risk. The Transcontinental is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Transcontinental on October 17, 2024 and sell it today you would lose (7.00) from holding Transcontinental or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Transcontinental
Performance |
| Timeline |
| Great West Lifeco |
| Transcontinental |
Great West and Transcontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Transcontinental
The main advantage of trading using opposite Great West and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental's long position.| Great West vs. Sun Life Financial | Great West vs. Power | Great West vs. Manulife Financial Corp | Great West vs. National Bank of |
| Transcontinental vs. Cogeco Communications | Transcontinental vs. Quebecor | Transcontinental vs. CCL Industries | Transcontinental vs. Finning International |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges |