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 Government Mortgage 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
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great-west and Great-west is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Great West Government Mortgage 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 Government Mortgage 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 is expected to generate 1.34 times less return on investment than Great-west Templeton. But when comparing it to its historical volatility, Great West Government Mortgage is 1.21 times less risky than Great-west Templeton. It trades about 0.09 of its potential returns per unit of risk. Great West Templeton Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 667.00 in Great West Templeton Global on November 3, 2024 and sell it today you would earn a total of 5.00 from holding Great West Templeton Global or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Government Mortgage vs. Great West Templeton Global
Performance |
| Timeline |
| Great West Government |
| 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. Simt Multi Asset Inflation | Great-west vs. Tiaa Cref Inflation Link | Great-west vs. Atac Inflation Rotation | Great-west vs. Credit Suisse Multialternative |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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