Correlation Between Western Asset and Great-west
Can any of the company-specific risk be diversified away by investing in both Western Asset and Great-west 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 Western Asset and Great-west into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Great West Sp Small, you can compare the effects of market volatilities on Western Asset and Great-west 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 Western Asset with a short position of Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Great-west.
Diversification Opportunities for Western Asset and Great-west
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Great-west is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Great West Sp Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Sp and Western Asset 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 Western Asset Inflation are associated (or correlated) with Great-west. 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 Sp has no effect on the direction of Western Asset i.e., Western Asset and Great-west go up and down completely randomly.
Pair Corralation between Western Asset and Great-west
Assuming the 90 days horizon Western Asset is expected to generate 14.85 times less return on investment than Great-west. But when comparing it to its historical volatility, Western Asset Inflation is 5.64 times less risky than Great-west. It trades about 0.1 of its potential returns per unit of risk. Great West Sp Small is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,343 in Great West Sp Small on September 4, 2024 and sell it today you would earn a total of 138.00 from holding Great West Sp Small or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Western Asset Inflation vs. Great West Sp Small
Performance |
| Timeline |
| Western Asset Inflation |
| Great West Sp |
Western Asset and Great-west Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Great-west
The main advantage of trading using opposite Western Asset and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Great-west 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 will offset losses from the drop in Great-west's long position.| Western Asset vs. Ab Small Cap | Western Asset vs. Commonwealth Global Fund | Western Asset vs. Growth Strategy Fund | Western Asset vs. T Rowe Price |
| Great-west vs. Virtus Seix Government | Great-west vs. John Hancock Government | Great-west vs. Lord Abbett Government | Great-west vs. Us Government Plus |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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