Correlation Between Great West and Vanguard Small

Can any of the company-specific risk be diversified away by investing in both Great West and Vanguard Small 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 Vanguard Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great West Sp Small and Vanguard Small Cap Index, you can compare the effects of market volatilities on Great West and Vanguard Small 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Vanguard Small.

Diversification Opportunities for Great West and Vanguard Small

0.83

Correlation Coefficient

Great West  Vanguard Small

Very poor diversification

The 3 months correlation between Great and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Great West Sp Small and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Sp Small are associated (or correlated) with Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Great West i.e., Great West and Vanguard Small go up and down completely randomly.

Pair Corralation between Great West and Vanguard Small

If you would invest (100.00) in Great West Sp Small on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Great West Sp Small or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.0%
Values	Daily Returns

Great West Sp Small  vs.  Vanguard Small Cap Index

Great West Sp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Sp Small 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.

Vanguard Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Small Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Small 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 and Vanguard Small

The main advantage of trading using opposite Great West and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Vanguard Small 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 Vanguard Small will offset losses from the drop in Vanguard Small's long position.

The idea behind Great West Sp Small and Vanguard Small Cap Index 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.