Correlation Between Great-west Moderate and Great-west Lifetime
Can any of the company-specific risk be diversified away by investing in both Great-west Moderate 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 Moderate 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 Moderate Profile and Great West Lifetime 2020, you can compare the effects of market volatilities on Great-west Moderate 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 Moderate with a short position of Great-west Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Moderate and Great-west Lifetime.
Diversification Opportunities for Great-west Moderate and Great-west Lifetime
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great-west and Great-west is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Great West Moderate Profile and Great West Lifetime 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime and Great-west Moderate 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 Moderate Profile 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 Moderate i.e., Great-west Moderate and Great-west Lifetime go up and down completely randomly.
Pair Corralation between Great-west Moderate and Great-west Lifetime
Assuming the 90 days horizon Great West Moderate Profile is expected to generate 1.15 times more return on investment than Great-west Lifetime. However, Great-west Moderate is 1.15 times more volatile than Great West Lifetime 2020. It trades about 0.08 of its potential returns per unit of risk. Great West Lifetime 2020 is currently generating about 0.07 per unit of risk. If you would invest 1,026 in Great West Moderate Profile on August 31, 2024 and sell it today you would earn a total of 156.00 from holding Great West Moderate Profile or generate 15.2% 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 Moderate Profile vs. Great West Lifetime 2020
Performance |
| Timeline |
| Great West Moderate |
| Great West Lifetime |
Great-west Moderate and Great-west Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Moderate and Great-west Lifetime
The main advantage of trading using opposite Great-west Moderate and Great-west Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Moderate 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 Moderate vs. American Funds American | Great-west Moderate vs. American Funds American | Great-west Moderate vs. American Balanced | Great-west Moderate vs. American Balanced Fund |
| Great-west Lifetime vs. Artisan Small Cap | Great-west Lifetime vs. Small Midcap Dividend Income | Great-west Lifetime vs. Tax Managed Mid Small | Great-west Lifetime vs. Vanguard Small Cap Growth |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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