Correlation Between Great-west Loomis and New World
Can any of the company-specific risk be diversified away by investing in both Great-west Loomis and New World 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 Loomis and New World 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 New World Fund, you can compare the effects of market volatilities on Great-west Loomis and New World 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 Loomis with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Loomis and New World.
Diversification Opportunities for Great-west Loomis and New World
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great-west and New is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund and Great-west Loomis 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Great-west Loomis i.e., Great-west Loomis and New World go up and down completely randomly.
Pair Corralation between Great-west Loomis and New World
Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 1.52 times more return on investment than New World. However, Great-west Loomis is 1.52 times more volatile than New World Fund. It trades about 0.12 of its potential returns per unit of risk. New World Fund is currently generating about 0.04 per unit of risk. If you would invest 3,854 in Great West Loomis Sayles on October 21, 2024 and sell it today you would earn a total of 81.00 from holding Great West Loomis Sayles or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Loomis Sayles vs. New World Fund
Performance |
| Timeline |
| Great West Loomis |
| New World Fund |
Great-west Loomis and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Loomis and New World
The main advantage of trading using opposite Great-west Loomis and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Loomis position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Great-west Loomis vs. Rationalpier 88 Convertible | Great-west Loomis vs. Virtus Convertible | Great-west Loomis vs. Advent Claymore Convertible | Great-west Loomis vs. Invesco Vertible Securities |
| New World vs. Ab Bond Inflation | New World vs. Maryland Tax Free Bond | New World vs. Morningstar Defensive Bond | New World vs. Artisan High Income |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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