Correlation Between Great-west Inflation-protec and Undiscovered Managers

Can any of the company-specific risk be diversified away by investing in both Great-west Inflation-protec and Undiscovered Managers 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 Inflation-protec and Undiscovered Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great West Inflation Protected Securities and Undiscovered Managers Behavioral, you can compare the effects of market volatilities on Great-west Inflation-protec and Undiscovered Managers 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 Inflation-protec with a short position of Undiscovered Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Inflation-protec and Undiscovered Managers.

Diversification Opportunities for Great-west Inflation-protec and Undiscovered Managers

0.74

Correlation Coefficient

Great-west Inflation-protec  Undiscovered Managers

Poor diversification

The 3 months correlation between Great-west and Undiscovered is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Great West Inflation Protected and Undiscovered Managers Behavior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Undiscovered Managers and Great-west Inflation-protec 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 Inflation Protected Securities are associated (or correlated) with Undiscovered Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Undiscovered Managers has no effect on the direction of Great-west Inflation-protec i.e., Great-west Inflation-protec and Undiscovered Managers go up and down completely randomly.

Pair Corralation between Great-west Inflation-protec and Undiscovered Managers

Assuming the 90 days horizon Great-west Inflation-protec is expected to generate 22.33 times less return on investment than Undiscovered Managers. But when comparing it to its historical volatility, Great West Inflation Protected Securities is 3.38 times less risky than Undiscovered Managers. It trades about 0.01 of its potential returns per unit of risk. Undiscovered Managers Behavioral is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,963  in Undiscovered Managers Behavioral on March 2, 2024 and sell it today you would earn a total of  1,256  from holding Undiscovered Managers Behavioral or generate 21.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Great West Inflation Protected  vs.  Undiscovered Managers Behavior

Great-west Inflation-protec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Inflation Protected Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Great-west Inflation-protec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Undiscovered Managers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Undiscovered Managers Behavioral are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Undiscovered Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Great-west Inflation-protec and Undiscovered Managers

The main advantage of trading using opposite Great-west Inflation-protec and Undiscovered Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Inflation-protec position performs unexpectedly, Undiscovered Managers 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 Undiscovered Managers will offset losses from the drop in Undiscovered Managers' long position.

The idea behind Great West Inflation Protected Securities and Undiscovered Managers Behavioral pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.