Correlation Between Great West and Pimco Preferred
Can any of the company-specific risk be diversified away by investing in both Great West and Pimco Preferred 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 Pimco Preferred 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 Pimco Preferred And, you can compare the effects of market volatilities on Great West and Pimco Preferred 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 Pimco Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Pimco Preferred.
Diversification Opportunities for Great West and Pimco Preferred
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Pimco is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Pimco Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Preferred And 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 Pimco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Preferred And has no effect on the direction of Great West i.e., Great West and Pimco Preferred go up and down completely randomly.
Pair Corralation between Great West and Pimco Preferred
Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 10.54 times more return on investment than Pimco Preferred. However, Great West is 10.54 times more volatile than Pimco Preferred And. It trades about 0.25 of its potential returns per unit of risk. Pimco Preferred And is currently generating about -0.03 per unit of risk. If you would invest 3,853 in Great West Loomis Sayles on August 29, 2024 and sell it today you would earn a total of 364.00 from holding Great West Loomis Sayles or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Great West Loomis Sayles vs. Pimco Preferred And
Performance |
| Timeline |
| Great West Loomis |
| Pimco Preferred And |
Great West and Pimco Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Pimco Preferred
The main advantage of trading using opposite Great West and Pimco Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Pimco Preferred 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 Pimco Preferred will offset losses from the drop in Pimco Preferred's long position.| Great West vs. Dreyfus Natural Resources | Great West vs. World Energy Fund | Great West vs. Tortoise Energy Independence | Great West vs. Jennison Natural Resources |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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