Correlation Between Great-west Real and Western Asset
Can any of the company-specific risk be diversified away by investing in both Great-west Real and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Great-west Real and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Real and Western Asset.
Diversification Opportunities for Great-west Real and Western Asset
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great-west and Western is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Great-west Real i.e., Great-west Real and Western Asset go up and down completely randomly.
Pair Corralation between Great-west Real and Western Asset
Assuming the 90 days horizon Great West Real Estate is expected to generate 2.5 times more return on investment than Western Asset. However, Great-west Real is 2.5 times more volatile than Western Asset E. It trades about 0.05 of its potential returns per unit of risk. Western Asset E is currently generating about -0.19 per unit of risk. If you would invest 1,363 in Great West Real Estate on August 30, 2024 and sell it today you would earn a total of 25.00 from holding Great West Real Estate or generate 1.83% 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. Western Asset E
Performance |
| Timeline |
| Great West Real |
| Western Asset E |
Great-west Real and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west Real and Western Asset
The main advantage of trading using opposite Great-west Real and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Real position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Great-west Real vs. Arrow Managed Futures | Great-west Real vs. Oklahoma College Savings | Great-west Real vs. Guidepath Managed Futures | Great-west Real vs. Fidelity Sai Inflationfocused |
| Western Asset vs. Tax Managed Mid Small | Western Asset vs. The Hartford Small | Western Asset vs. Ab Small Cap | Western Asset vs. Gmo Small Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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