Correlation Between Great-West Lifeco and Vanguard Funds
Can any of the company-specific risk be diversified away by investing in both Great-West Lifeco and Vanguard Funds 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 Lifeco and Vanguard Funds 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 Vanguard Funds Public, you can compare the effects of market volatilities on Great-West Lifeco and Vanguard Funds 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 Lifeco with a short position of Vanguard Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-West Lifeco and Vanguard Funds.
Diversification Opportunities for Great-West Lifeco and Vanguard Funds
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great-West and Vanguard is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public and Great-West Lifeco 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 Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Great-West Lifeco i.e., Great-West Lifeco and Vanguard Funds go up and down completely randomly.
Pair Corralation between Great-West Lifeco and Vanguard Funds
Assuming the 90 days horizon Great West Lifeco is expected to under-perform the Vanguard Funds. In addition to that, Great-West Lifeco is 1.38 times more volatile than Vanguard Funds Public. It trades about -0.1 of its total potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.09 per unit of volatility. If you would invest 10,851 in Vanguard Funds Public on October 22, 2024 and sell it today you would earn a total of 125.00 from holding Vanguard Funds Public or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Great West Lifeco vs. Vanguard Funds Public
Performance |
| Timeline |
| Great West Lifeco |
| Vanguard Funds Public |
Great-West Lifeco and Vanguard Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-West Lifeco and Vanguard Funds
The main advantage of trading using opposite Great-West Lifeco and Vanguard Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-West Lifeco position performs unexpectedly, Vanguard Funds 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 Vanguard Funds will offset losses from the drop in Vanguard Funds' long position.| Great-West Lifeco vs. Mitsubishi Materials | Great-West Lifeco vs. NXP Semiconductors NV | Great-West Lifeco vs. Compagnie Plastic Omnium | Great-West Lifeco vs. THRACE PLASTICS |
| Vanguard Funds vs. Vanguard ESG Developed | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. Vanguard Funds PLC | Vanguard Funds vs. Vanguard Funds Public |
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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