Correlation Between Great West and Conservative Allocation
Can any of the company-specific risk be diversified away by investing in both Great West and Conservative Allocation 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 Conservative Allocation 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 Conservative Allocation Fund, you can compare the effects of market volatilities on Great West and Conservative Allocation 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 Conservative Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Conservative Allocation.
Diversification Opportunities for Great West and Conservative Allocation
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and Conservative is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Conservative Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conservative Allocation 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 Conservative Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conservative Allocation has no effect on the direction of Great West i.e., Great West and Conservative Allocation go up and down completely randomly.
Pair Corralation between Great West and Conservative Allocation
Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 4.62 times more return on investment than Conservative Allocation. However, Great West is 4.62 times more volatile than Conservative Allocation Fund. It trades about 0.05 of its potential returns per unit of risk. Conservative Allocation Fund is currently generating about 0.12 per unit of risk. If you would invest 3,160 in Great West Loomis Sayles on September 14, 2024 and sell it today you would earn a total of 919.00 from holding Great West Loomis Sayles or generate 29.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Great West Loomis Sayles vs. Conservative Allocation Fund
Performance |
| Timeline |
| Great West Loomis |
| Conservative Allocation |
Great West and Conservative Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Conservative Allocation
The main advantage of trading using opposite Great West and Conservative Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Conservative Allocation 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 Conservative Allocation will offset losses from the drop in Conservative Allocation's long position.| Great West vs. Vanguard Health Care | Great West vs. Baron Health Care | Great West vs. Invesco Global Health | Great West vs. Delaware Healthcare Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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