Correlation Between Power and Great West
Can any of the company-specific risk be diversified away by investing in both Power 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 Power and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power and Great West Lifeco, you can compare the effects of market volatilities on Power 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 Power with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power and Great West.
Diversification Opportunities for Power and Great West
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and Great is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Power and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and Power 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 Power 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 Lifeco has no effect on the direction of Power i.e., Power and Great West go up and down completely randomly.
Pair Corralation between Power and Great West
Assuming the 90 days trading horizon Power is expected to generate 0.9 times more return on investment than Great West. However, Power is 1.11 times less risky than Great West. It trades about 0.23 of its potential returns per unit of risk. Great West Lifeco is currently generating about 0.19 per unit of risk. If you would invest 5,361 in Power on July 20, 2025 and sell it today you would earn a total of 705.00 from holding Power or generate 13.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power vs. Great West Lifeco
Performance |
| Timeline |
| Power |
| Great West Lifeco |
Power and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power and Great West
The main advantage of trading using opposite Power and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power 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.| Power vs. Great West Lifeco | Power vs. Power Financial Corp | Power vs. Manulife Financial Corp | Power vs. Sun Life Financial |
| Great West vs. Manulife Financial Corp | Great West vs. Power | Great West vs. Sun Life Financial | Great West vs. Fairfax Financial Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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