Correlation Between Great-west Bond and Great-west International
Can any of the company-specific risk be diversified away by investing in both Great-west Bond and Great-west International 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 International 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 International Index, you can compare the effects of market volatilities on Great-west Bond and Great-west International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Bond and Great-west International.
Diversification Opportunities for Great-west Bond and Great-west International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great-west and Great-west is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Great West Bond Index and Great West International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west International 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 International. 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 International has no effect on the direction of Great-west Bond i.e., Great-west Bond and Great-west International go up and down completely randomly.
Pair Corralation between Great-west Bond and Great-west International
Assuming the 90 days horizon Great West Bond Index is expected to generate 0.46 times more return on investment than Great-west International. However, Great West Bond Index is 2.19 times less risky than Great-west International. It trades about 0.1 of its potential returns per unit of risk. Great West International Index is currently generating about -0.12 per unit of risk. If you would invest 852.00 in Great West Bond Index on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Great West Bond Index or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Bond Index vs. Great West International Index
Performance |
| Timeline |
| Great West Bond |
| Great-west International |
Great-west Bond and Great-west International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Bond and Great-west International
The main advantage of trading using opposite Great-west Bond and Great-west International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Bond position performs unexpectedly, Great-west International 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 International will offset losses from the drop in Great-west International's long position.| Great-west Bond vs. Pender Real Estate | Great-west Bond vs. Virtus Real Estate | Great-west Bond vs. Simt Real Estate | Great-west Bond vs. Vanguard Reit Index |
| Great-west International vs. California Bond Fund | Great-west International vs. Transamerica Funds | Great-west International vs. Versatile Bond Portfolio | Great-west International vs. Ambrus Core Bond |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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