Correlation Between Great West and Great-west Templeton
Can any of the company-specific risk be diversified away by investing in both Great West and Great-west Templeton 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-west Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifetime 2040 and Great West Templeton Global, you can compare the effects of market volatilities on Great West and Great-west Templeton 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-west Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Great-west Templeton.
Diversification Opportunities for Great West and Great-west Templeton
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Great-west is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifetime 2040 and Great West Templeton Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Templeton 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 2040 are associated (or correlated) with Great-west Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Templeton has no effect on the direction of Great West i.e., Great West and Great-west Templeton go up and down completely randomly.
Pair Corralation between Great West and Great-west Templeton
Assuming the 90 days horizon Great West Lifetime 2040 is expected to generate 2.06 times more return on investment than Great-west Templeton. However, Great West is 2.06 times more volatile than Great West Templeton Global. It trades about 0.05 of its potential returns per unit of risk. Great West Templeton Global is currently generating about 0.02 per unit of risk. If you would invest 1,025 in Great West Lifetime 2040 on November 3, 2024 and sell it today you would earn a total of 92.00 from holding Great West Lifetime 2040 or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifetime 2040 vs. Great West Templeton Global
Performance |
| Timeline |
| Great West Lifetime |
| Great West Templeton |
Great West and Great-west Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Great-west Templeton
The main advantage of trading using opposite Great West and Great-west Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Great-west Templeton 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-west Templeton will offset losses from the drop in Great-west Templeton's long position.| Great West vs. Franklin Emerging Market | Great West vs. Nasdaq 100 2x Strategy | Great West vs. Old Westbury Short Term | Great West vs. Balanced Strategy Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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