Correlation Between Great West and Tucows
Can any of the company-specific risk be diversified away by investing in both Great West and Tucows 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 Tucows into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Tucows Inc, you can compare the effects of market volatilities on Great West and Tucows 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 Tucows. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Tucows.
Diversification Opportunities for Great West and Tucows
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Great and Tucows is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Tucows Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tucows Inc 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 Lifeco are associated (or correlated) with Tucows. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tucows Inc has no effect on the direction of Great West i.e., Great West and Tucows go up and down completely randomly.
Pair Corralation between Great West and Tucows
Assuming the 90 days trading horizon Great West Lifeco is expected to under-perform the Tucows. But the preferred stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 4.42 times less risky than Tucows. The preferred stock trades about -0.3 of its potential returns per unit of risk. The Tucows Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,477 in Tucows Inc on January 20, 2024 and sell it today you would lose (70.00) from holding Tucows Inc or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Tucows Inc
Performance |
| Timeline |
| Great West Lifeco |
| Tucows Inc |
Great West and Tucows Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Tucows
The main advantage of trading using opposite Great West and Tucows positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Tucows 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 Tucows will offset losses from the drop in Tucows' long position.| Great West vs. Bip Investment Corp | Great West vs. 2028 Investment Grade | Great West vs. Capitan Investment | Great West vs. Data Communications Management |
| Tucows vs. TECSYS Inc | Tucows vs. Descartes Systems Group | Tucows vs. Enghouse Systems | Tucows vs. Evertz Technologies Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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