Correlation Between Federated Government and Great-west

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Can any of the company-specific risk be diversified away by investing in both Federated Government 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 Federated Government and Great-west into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Income and Great West Us Government, you can compare the effects of market volatilities on Federated Government 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 Federated Government with a short position of Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Great-west.

Diversification Opportunities for Federated Government and Great-west

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Federated and Great-west is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding FEDERATED GOVERNMENT INCOME and GREAT-WEST US GOVERNMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Us Government and Federated Government 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 Federated Government Income 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 Us Government has no effect on the direction of Federated Government i.e., Federated Government and Great-west go up and down completely randomly.

Pair Corralation between Federated Government and Great-west

Assuming the 90 days horizon Federated Government Income is expected to under-perform the Great-west. In addition to that, Federated Government is 1.31 times more volatile than Great West Us Government. It trades about -0.01 of its total potential returns per unit of risk. Great West Us Government is currently generating about 0.0 per unit of volatility. If you would invest  830.00  in Great West Us Government on December 30, 2023 and sell it today you would lose (14.00) from holding Great West Us Government or give up 1.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

FEDERATED GOVERNMENT INCOME  vs.  GREAT-WEST US GOVERNMENT

 Performance 
       Timeline  
Federated Government 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Federated Government Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Federated Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Great-west Us Government 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Great West Us Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Great-west is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Government and Great-west Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Federated Government and Great-west

The main advantage of trading using opposite Federated Government and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government 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.
The idea behind Federated Government Income and Great West Us Government 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.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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