Correlation Between Great-west Real and Kentucky Tax-free
Can any of the company-specific risk be diversified away by investing in both Great-west Real and Kentucky Tax-free 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 Kentucky Tax-free 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 Kentucky Tax Free Income, you can compare the effects of market volatilities on Great-west Real and Kentucky Tax-free 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 Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Real and Kentucky Tax-free.
Diversification Opportunities for Great-west Real and Kentucky Tax-free
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great-west and Kentucky is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Great-west Real i.e., Great-west Real and Kentucky Tax-free go up and down completely randomly.
Pair Corralation between Great-west Real and Kentucky Tax-free
Assuming the 90 days horizon Great-west Real is expected to generate 2.29 times less return on investment than Kentucky Tax-free. In addition to that, Great-west Real is 3.16 times more volatile than Kentucky Tax Free Income. It trades about 0.02 of its total potential returns per unit of risk. Kentucky Tax Free Income is currently generating about 0.11 per unit of volatility. If you would invest 718.00 in Kentucky Tax Free Income on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Kentucky Tax Free Income or generate 0.7% 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 Real Estate vs. Kentucky Tax Free Income
Performance |
| Timeline |
| Great West Real |
| Kentucky Tax Free |
Great-west Real and Kentucky Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Real and Kentucky Tax-free
The main advantage of trading using opposite Great-west Real and Kentucky Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Real position performs unexpectedly, Kentucky Tax-free 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 Kentucky Tax-free will offset losses from the drop in Kentucky Tax-free's 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 |
| Kentucky Tax-free vs. Great West Real Estate | Kentucky Tax-free vs. Neuberger Berman Real | Kentucky Tax-free vs. Columbia Real Estate | Kentucky Tax-free vs. Franklin Real Estate |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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