Correlation Between Great-west Bond and Great-west Lifetime
Can any of the company-specific risk be diversified away by investing in both Great-west Bond and Great-west Lifetime 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 Lifetime 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 Lifetime 2030, you can compare the effects of market volatilities on Great-west Bond and Great-west Lifetime 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 Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Bond and Great-west Lifetime.
Diversification Opportunities for Great-west Bond and Great-west Lifetime
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Great-west and Great-west is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Great West Bond Index and Great West Lifetime 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Lifetime. 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 Lifetime has no effect on the direction of Great-west Bond i.e., Great-west Bond and Great-west Lifetime go up and down completely randomly.
Pair Corralation between Great-west Bond and Great-west Lifetime
Assuming the 90 days horizon Great-west Bond is expected to generate 2.1 times less return on investment than Great-west Lifetime. But when comparing it to its historical volatility, Great West Bond Index is 1.36 times less risky than Great-west Lifetime. It trades about 0.04 of its potential returns per unit of risk. Great West Lifetime 2030 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 988.00 in Great West Lifetime 2030 on August 31, 2024 and sell it today you would earn a total of 122.00 from holding Great West Lifetime 2030 or generate 12.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Bond Index vs. Great West Lifetime 2030
Performance |
| Timeline |
| Great West Bond |
| Great West Lifetime |
Great-west Bond and Great-west Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Bond and Great-west Lifetime
The main advantage of trading using opposite Great-west Bond and Great-west Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Bond position performs unexpectedly, Great-west Lifetime 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 Lifetime will offset losses from the drop in Great-west Lifetime's long position.| 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 |
| Great-west Lifetime vs. Aqr Managed Futures | Great-west Lifetime vs. Fidelity Advisor 529 | Great-west Lifetime vs. American Funds Inflation | Great-west Lifetime vs. Ab Bond Inflation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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