Correlation Between Great West and Western Asset
Can any of the company-specific risk be diversified away by investing in both Great West and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifetime 2060 and Western Asset Diversified, you can compare the effects of market volatilities on Great West and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Western Asset.
Diversification Opportunities for Great West and Western Asset
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Western is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifetime 2060 and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Lifetime 2060 are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Great West i.e., Great West and Western Asset go up and down completely randomly.
Pair Corralation between Great West and Western Asset
Assuming the 90 days horizon Great West Lifetime 2060 is expected to generate 2.14 times more return on investment than Western Asset. However, Great West is 2.14 times more volatile than Western Asset Diversified. It trades about 0.07 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.02 per unit of risk. If you would invest 982.00 in Great West Lifetime 2060 on September 12, 2024 and sell it today you would earn a total of 181.00 from holding Great West Lifetime 2060 or generate 18.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Great West Lifetime 2060 vs. Western Asset Diversified
Performance |
| Timeline |
| Great West Lifetime |
| Western Asset Diversified |
Great West and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Western Asset
The main advantage of trading using opposite Great West and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Great West vs. Western Asset Diversified | Great West vs. Tax Free Conservative Income | Great West vs. Calvert Conservative Allocation | Great West vs. Wilmington Diversified Income |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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