Correlation Between Great-west and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Great-west and Arrow Managed 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 Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Sp Small and Arrow Managed Futures, you can compare the effects of market volatilities on Great-west and Arrow Managed 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 Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west and Arrow Managed.
Diversification Opportunities for Great-west and Arrow Managed
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great-west and Arrow is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Small and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures 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 Sp Small are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Great-west i.e., Great-west and Arrow Managed go up and down completely randomly.
Pair Corralation between Great-west and Arrow Managed
Assuming the 90 days horizon Great West Sp Small is expected to generate 0.82 times more return on investment than Arrow Managed. However, Great West Sp Small is 1.21 times less risky than Arrow Managed. It trades about 0.04 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about 0.01 per unit of risk. If you would invest 1,215 in Great West Sp Small on September 4, 2024 and sell it today you would earn a total of 266.00 from holding Great West Sp Small or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Sp Small vs. Arrow Managed Futures
Performance |
| Timeline |
| Great West Sp |
| Arrow Managed Futures |
Great-west and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west and Arrow Managed
The main advantage of trading using opposite Great-west and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed's long position.| Great-west vs. Virtus Seix Government | Great-west vs. John Hancock Government | Great-west vs. Lord Abbett Government | Great-west vs. Us Government Plus |
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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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