Correlation Between Great West and Commonwealth Global
Can any of the company-specific risk be diversified away by investing in both Great West and Commonwealth Global 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 and Commonwealth Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifetime 2055 and Commonwealth Global Fund, you can compare the effects of market volatilities on Great West and Commonwealth Global 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 with a short position of Commonwealth Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Commonwealth Global.
Diversification Opportunities for Great West and Commonwealth Global
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and Commonwealth is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifetime 2055 and Commonwealth Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Global and Great West 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 Lifetime 2055 are associated (or correlated) with Commonwealth Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Global has no effect on the direction of Great West i.e., Great West and Commonwealth Global go up and down completely randomly.
Pair Corralation between Great West and Commonwealth Global
Assuming the 90 days horizon Great West is expected to generate 3.77 times less return on investment than Commonwealth Global. But when comparing it to its historical volatility, Great West Lifetime 2055 is 1.21 times less risky than Commonwealth Global. It trades about 0.04 of its potential returns per unit of risk. Commonwealth Global Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,161 in Commonwealth Global Fund on September 12, 2024 and sell it today you would earn a total of 33.00 from holding Commonwealth Global Fund or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifetime 2055 vs. Commonwealth Global Fund
Performance |
| Timeline |
| Great West Lifetime |
| Commonwealth Global |
Great West and Commonwealth Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Commonwealth Global
The main advantage of trading using opposite Great West and Commonwealth Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Commonwealth Global 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 Commonwealth Global will offset losses from the drop in Commonwealth Global's long position.| Great West vs. Vanguard Target Retirement | Great West vs. Fidelity Freedom 2055 | Great West vs. Aquagold International | Great West vs. Morningstar Unconstrained Allocation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |