Correlation Between Vanguard Total and Great-west Core

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

By analyzing existing cross correlation between Vanguard Total Stock and Great West E Strategies, you can compare the effects of market volatilities on Vanguard Total and Great-west Core 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 Vanguard Total with a short position of Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Great-west Core.

Diversification Opportunities for Vanguard Total and Great-west Core

0.97

Correlation Coefficient

Vanguard Total  Great-west Core

Almost no diversification

The 3 months correlation between Vanguard and Great-west is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Great-west Core. 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 Core has no effect on the direction of Vanguard Total i.e., Vanguard Total and Great-west Core go up and down completely randomly.

Pair Corralation between Vanguard Total and Great-west Core

Assuming the 90 days horizon Vanguard Total Stock is expected to under-perform the Great-west Core. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Total Stock is 1.08 times less risky than Great-west Core. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Great West E Strategies is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,522  in Great West E Strategies on January 26, 2024 and sell it today you would lose (30.00) from holding Great West E Strategies or give up 1.97% of portfolio value over 90 days.

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

Vanguard Total Stock  vs.  Great West E Strategies

Vanguard Total Stock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great-west Core

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West E Strategies are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Great-west Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Great-west Core

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

The idea behind Vanguard Total Stock and Great West E Strategies 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.