Correlation Between Great-west Real and Gotham Hedged
Can any of the company-specific risk be diversified away by investing in both Great-west Real and Gotham Hedged 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 Gotham Hedged 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 Gotham Hedged E, you can compare the effects of market volatilities on Great-west Real and Gotham Hedged 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 Gotham Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Real and Gotham Hedged.
Diversification Opportunities for Great-west Real and Gotham Hedged
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great-west and Gotham is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E 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 Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of Great-west Real i.e., Great-west Real and Gotham Hedged go up and down completely randomly.
Pair Corralation between Great-west Real and Gotham Hedged
Assuming the 90 days horizon Great West Real Estate is expected to generate 1.11 times more return on investment than Gotham Hedged. However, Great-west Real is 1.11 times more volatile than Gotham Hedged E. It trades about 0.31 of its potential returns per unit of risk. Gotham Hedged E is currently generating about 0.26 per unit of risk. If you would invest 1,320 in Great West Real Estate on September 4, 2024 and sell it today you would earn a total of 68.00 from holding Great West Real Estate or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Great West Real Estate vs. Gotham Hedged E
Performance |
| Timeline |
| Great West Real |
| Gotham Hedged E |
Great-west Real and Gotham Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Real and Gotham Hedged
The main advantage of trading using opposite Great-west Real and Gotham Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Real position performs unexpectedly, Gotham Hedged 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 Gotham Hedged will offset losses from the drop in Gotham Hedged's long position.| Great-west Real vs. Qs Moderate Growth | Great-west Real vs. Eip Growth And | Great-west Real vs. Rational Defensive Growth | Great-west Real vs. Franklin Growth Opportunities |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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