Correlation Between Great-west Bond and Great-west
Can any of the company-specific risk be diversified away by investing in both Great-west Bond and Great-west 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 Bond and Great-west into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Bond Index and Great West Government Mortgage, you can compare the effects of market volatilities on Great-west Bond and Great-west 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 Bond with a short position of Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Bond and Great-west.
Diversification Opportunities for Great-west Bond and Great-west
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Great-west and Great-west is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Great West Bond Index and Great West Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Government and Great-west Bond 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 Bond Index are associated (or correlated) with Great-west. 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 Government has no effect on the direction of Great-west Bond i.e., Great-west Bond and Great-west go up and down completely randomly.
Pair Corralation between Great-west Bond and Great-west
Assuming the 90 days horizon Great-west Bond is expected to generate 1.09 times less return on investment than Great-west. But when comparing it to its historical volatility, Great West Bond Index is 1.1 times less risky than Great-west. It trades about 0.1 of its potential returns per unit of risk. Great West Government Mortgage is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 804.00 in Great West Government Mortgage on August 28, 2024 and sell it today you would earn a total of 37.00 from holding Great West Government Mortgage or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Bond Index vs. Great West Government Mortgage
Performance |
| Timeline |
| Great West Bond |
| Great West Government |
Great-west Bond and Great-west Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Bond and Great-west
The main advantage of trading using opposite Great-west Bond and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Bond position performs unexpectedly, Great-west 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 will offset losses from the drop in Great-west's long position.| Great-west Bond vs. T Rowe Price | Great-west Bond vs. Aqr Large Cap | Great-west Bond vs. Fidelity Stock Selector | Great-west Bond vs. Dodge Cox Stock |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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