Correlation Between Great-west and Great-west Bond
Can any of the company-specific risk be diversified away by investing in both Great-west and Great-west Bond 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 Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Sp Mid and Great West Bond Index, you can compare the effects of market volatilities on Great-west and Great-west Bond 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 Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west and Great-west Bond.
Diversification Opportunities for Great-west and Great-west Bond
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great-west and Great-west is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Mid and Great West Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Bond 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 Sp Mid are associated (or correlated) with Great-west Bond. 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 Bond has no effect on the direction of Great-west i.e., Great-west and Great-west Bond go up and down completely randomly.
Pair Corralation between Great-west and Great-west Bond
Assuming the 90 days horizon Great West Sp Mid is expected to generate 3.1 times more return on investment than Great-west Bond. However, Great-west is 3.1 times more volatile than Great West Bond Index. It trades about 0.08 of its potential returns per unit of risk. Great West Bond Index is currently generating about 0.04 per unit of risk. If you would invest 751.00 in Great West Sp Mid on August 31, 2024 and sell it today you would earn a total of 281.00 from holding Great West Sp Mid or generate 37.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Sp Mid vs. Great West Bond Index
Performance |
| Timeline |
| Great West Sp |
| Great West Bond |
Great-west and Great-west Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west and Great-west Bond
The main advantage of trading using opposite Great-west and Great-west Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west position performs unexpectedly, Great-west Bond 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 Bond will offset losses from the drop in Great-west Bond's long position.| Great-west vs. Vanguard Mid Cap Index | Great-west vs. Vanguard Mid Cap Index | Great-west vs. Vanguard Mid Cap Index | Great-west vs. Vanguard Extended Market |
| Great-west Bond vs. Huber Capital Equity | Great-west Bond vs. Ms Global Fixed | Great-west Bond vs. Ultra Short Fixed Income | Great-west Bond vs. Calamos Global Equity |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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