Correlation Between Great West and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Great West and Growth Opportunities 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 Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifetime 2020 and Growth Opportunities Fund, you can compare the effects of market volatilities on Great West and Growth Opportunities 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 Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Growth Opportunities.
Diversification Opportunities for Great West and Growth Opportunities
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and Growth is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifetime 2020 and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities 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 Lifetime 2020 are associated (or correlated) with Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Great West i.e., Great West and Growth Opportunities go up and down completely randomly.
Pair Corralation between Great West and Growth Opportunities
Assuming the 90 days horizon Great West Lifetime 2020 is expected to generate 0.29 times more return on investment than Growth Opportunities. However, Great West Lifetime 2020 is 3.42 times less risky than Growth Opportunities. It trades about 0.11 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about -0.05 per unit of risk. If you would invest 1,039 in Great West Lifetime 2020 on November 30, 2024 and sell it today you would earn a total of 17.00 from holding Great West Lifetime 2020 or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifetime 2020 vs. Growth Opportunities Fund
Performance |
| Timeline |
| Great West Lifetime |
| Growth Opportunities |
Great West and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Growth Opportunities
The main advantage of trading using opposite Great West and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Great West vs. Inverse Government Long | Great West vs. Us Government Securities | Great West vs. Franklin Adjustable Government | Great West vs. Lord Abbett Intermediate |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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