Correlation Between Great-west Real and American Balanced
Can any of the company-specific risk be diversified away by investing in both Great-west Real and American Balanced 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 American Balanced 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 American Balanced Fund, you can compare the effects of market volatilities on Great-west Real and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Real and American Balanced.
Diversification Opportunities for Great-west Real and American Balanced
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great-west and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Great-west Real i.e., Great-west Real and American Balanced go up and down completely randomly.
Pair Corralation between Great-west Real and American Balanced
Assuming the 90 days horizon Great West Real Estate is expected to generate 1.68 times more return on investment than American Balanced. However, Great-west Real is 1.68 times more volatile than American Balanced Fund. It trades about 0.31 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.3 per unit of risk. If you would invest 1,320 in Great West Real Estate on September 3, 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 | 100.0% |
| Values | Daily Returns |
Great West Real Estate vs. American Balanced Fund
Performance |
| Timeline |
| Great West Real |
| American Balanced |
Great-west Real and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Real and American Balanced
The main advantage of trading using opposite Great-west Real and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Real position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| Great-west Real vs. Blackrock Inflation Protected | Great-west Real vs. Lord Abbett Inflation | Great-west Real vs. American Funds Inflation | Great-west Real vs. Aqr Managed Futures |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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