Correlation Between Great West and Federated Ultrashort
Can any of the company-specific risk be diversified away by investing in both Great West and Federated Ultrashort 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 Federated Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Goldman Sachs and Federated Ultrashort Bond, you can compare the effects of market volatilities on Great West and Federated Ultrashort 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 Federated Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Federated Ultrashort.
Diversification Opportunities for Great West and Federated Ultrashort
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort Bond 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 Goldman Sachs are associated (or correlated) with Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Great West i.e., Great West and Federated Ultrashort go up and down completely randomly.
Pair Corralation between Great West and Federated Ultrashort
Assuming the 90 days horizon Great West is expected to generate 2.71 times less return on investment than Federated Ultrashort. In addition to that, Great West is 6.38 times more volatile than Federated Ultrashort Bond. It trades about 0.02 of its total potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.32 per unit of volatility. If you would invest 923.00 in Federated Ultrashort Bond on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Federated Ultrashort Bond or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Goldman Sachs vs. Federated Ultrashort Bond
Performance |
| Timeline |
| Great West Goldman |
| Federated Ultrashort Bond |
Great West and Federated Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Federated Ultrashort
The main advantage of trading using opposite Great West and Federated Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Federated Ultrashort 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 Federated Ultrashort will offset losses from the drop in Federated Ultrashort's long position.| Great West vs. Simt Real Estate | Great West vs. Virtus Real Estate | Great West vs. Amg Managers Centersquare | Great West vs. Goldman Sachs Real |
| Federated Ultrashort vs. Federated Emerging Market | Federated Ultrashort vs. Federated Mdt All | Federated Ultrashort vs. Federated Mdt Balanced | Federated Ultrashort vs. Federated Global Allocation |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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