Correlation Between Nicholas and Great-west Lifetime
Can any of the company-specific risk be diversified away by investing in both Nicholas and Great-west Lifetime 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 Nicholas and Great-west Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nicholas Ltd Edition and Great West Lifetime 2050, you can compare the effects of market volatilities on Nicholas and Great-west Lifetime 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 Nicholas with a short position of Great-west Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicholas and Great-west Lifetime.
Diversification Opportunities for Nicholas and Great-west Lifetime
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nicholas and Great-west is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nicholas Ltd Edition and Great West Lifetime 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime and Nicholas 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 Nicholas Ltd Edition are associated (or correlated) with Great-west Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Nicholas i.e., Nicholas and Great-west Lifetime go up and down completely randomly.
Pair Corralation between Nicholas and Great-west Lifetime
Assuming the 90 days horizon Nicholas Ltd Edition is expected to under-perform the Great-west Lifetime. In addition to that, Nicholas is 1.0 times more volatile than Great West Lifetime 2050. It trades about -0.05 of its total potential returns per unit of risk. Great West Lifetime 2050 is currently generating about 0.07 per unit of volatility. If you would invest 1,138 in Great West Lifetime 2050 on December 2, 2024 and sell it today you would earn a total of 26.00 from holding Great West Lifetime 2050 or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nicholas Ltd Edition vs. Great West Lifetime 2050
Performance |
| Timeline |
| Nicholas Edition |
| Great West Lifetime |
Nicholas and Great-west Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nicholas and Great-west Lifetime
The main advantage of trading using opposite Nicholas and Great-west Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicholas position performs unexpectedly, Great-west Lifetime 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 Great-west Lifetime will offset losses from the drop in Great-west Lifetime's long position.| Nicholas vs. Invesco Energy Fund | ||
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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