Correlation Between Great West and Small Cap
Can any of the company-specific risk be diversified away by investing in both Great West and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Loomis Sayles and Small Cap Value Fund, you can compare the effects of market volatilities on Great West and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Small Cap.
Diversification Opportunities for Great West and Small Cap
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Small is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Small Cap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Loomis Sayles are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Great West i.e., Great West and Small Cap go up and down completely randomly.
Pair Corralation between Great West and Small Cap
Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 0.87 times more return on investment than Small Cap. However, Great West Loomis Sayles is 1.15 times less risky than Small Cap. It trades about 0.15 of its potential returns per unit of risk. Small Cap Value Fund is currently generating about 0.12 per unit of risk. If you would invest 3,857 in Great West Loomis Sayles on October 23, 2024 and sell it today you would earn a total of 95.00 from holding Great West Loomis Sayles or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Loomis Sayles vs. Small Cap Value Fund
Performance |
| Timeline |
| Great West Loomis |
| Small Cap Value |
Great West and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Small Cap
The main advantage of trading using opposite Great West and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Great West vs. Qs Large Cap | Great West vs. Morningstar Global Income | Great West vs. Legg Mason Global | Great West vs. Rbb Fund |
| Small Cap vs. Oil Gas Ultrasector | Small Cap vs. Advisory Research Mlp | Small Cap vs. Goldman Sachs Mlp | Small Cap vs. Pimco Energy Tactical |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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