Correlation Between Great-west Loomis and Royce Opportunity
Can any of the company-specific risk be diversified away by investing in both Great-west Loomis and Royce Opportunity 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 Royce Opportunity 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 Royce Opportunity Fund, you can compare the effects of market volatilities on Great-west Loomis and Royce Opportunity 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 Royce Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Loomis and Royce Opportunity.
Diversification Opportunities for Great-west Loomis and Royce Opportunity
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Great-west and Royce is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Royce Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Opportunity 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 Royce Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Opportunity has no effect on the direction of Great-west Loomis i.e., Great-west Loomis and Royce Opportunity go up and down completely randomly.
Pair Corralation between Great-west Loomis and Royce Opportunity
Assuming the 90 days horizon Great-west Loomis is expected to generate 1.34 times less return on investment than Royce Opportunity. But when comparing it to its historical volatility, Great West Loomis Sayles is 1.06 times less risky than Royce Opportunity. It trades about 0.12 of its potential returns per unit of risk. Royce Opportunity Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,412 in Royce Opportunity Fund on September 2, 2024 and sell it today you would earn a total of 192.00 from holding Royce Opportunity Fund or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Loomis Sayles vs. Royce Opportunity Fund
Performance |
| Timeline |
| Great West Loomis |
| Royce Opportunity |
Great-west Loomis and Royce Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Loomis and Royce Opportunity
The main advantage of trading using opposite Great-west Loomis and Royce Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Loomis position performs unexpectedly, Royce Opportunity 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 Royce Opportunity will offset losses from the drop in Royce Opportunity's long position.| Great-west Loomis vs. Great West Securefoundation Balanced | Great-west Loomis vs. Great West Lifetime 2020 | Great-west Loomis vs. Great West Lifetime 2020 | Great-west Loomis vs. Great West Lifetime 2020 |
| Royce Opportunity vs. Harbor International Fund | Royce Opportunity vs. John Hancock Disciplined | Royce Opportunity vs. Ridgeworth Ceredex Small | Royce Opportunity vs. Jpmorgan Value Advantage |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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