Correlation Between Great-west Real and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Great-west Real and Emerging Markets 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 Real and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Real Estate and Emerging Markets Small, you can compare the effects of market volatilities on Great-west Real and Emerging Markets 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 Real with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Real and Emerging Markets.
Diversification Opportunities for Great-west Real and Emerging Markets
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great-west and Emerging is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and Emerging Markets Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Small and Great-west Real 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 Real Estate are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Small has no effect on the direction of Great-west Real i.e., Great-west Real and Emerging Markets go up and down completely randomly.
Pair Corralation between Great-west Real and Emerging Markets
Assuming the 90 days horizon Great West Real Estate is expected to generate 1.64 times more return on investment than Emerging Markets. However, Great-west Real is 1.64 times more volatile than Emerging Markets Small. It trades about 0.03 of its potential returns per unit of risk. Emerging Markets Small is currently generating about 0.05 per unit of risk. If you would invest 1,176 in Great West Real Estate on August 27, 2024 and sell it today you would earn a total of 174.00 from holding Great West Real Estate or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Real Estate vs. Emerging Markets Small
Performance |
| Timeline |
| Great West Real |
| Emerging Markets Small |
Great-west Real and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Real and Emerging Markets
The main advantage of trading using opposite Great-west Real and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Real position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Great-west Real vs. Realty Income | Great-west Real vs. Dynex Capital | Great-west Real vs. First Industrial Realty | Great-west Real vs. Healthcare Realty Trust |
| Emerging Markets vs. Great West Real Estate | Emerging Markets vs. Deutsche Real Estate | Emerging Markets vs. Amg Managers Centersquare | Emerging Markets vs. Guggenheim Risk Managed |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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