Correlation Between Great West and Small-cap Value

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

By analyzing existing cross correlation between Great West Loomis Sayles and Small Cap Value Series, you can compare the effects of market volatilities on Great West and Small-cap Value 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 Small-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Small-cap Value.

Diversification Opportunities for Great West and Small-cap Value

0.98

Correlation Coefficient

Great West  Small-cap Value

Almost no diversification

The 3 months correlation between Great and Small-cap is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Small Cap Value Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Loomis Sayles are associated (or correlated) with Small-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Great West i.e., Great West and Small-cap Value go up and down completely randomly.

Pair Corralation between Great West and Small-cap Value

Assuming the 90 days horizon Great West is expected to generate 1.08 times less return on investment than Small-cap Value. In addition to that, Great West is 1.03 times more volatile than Small Cap Value Series. It trades about 0.14 of its total potential returns per unit of risk. Small Cap Value Series is currently generating about 0.16 per unit of volatility. If you would invest  1,353  in Small Cap Value Series on May 4, 2025 and sell it today you would earn a total of  145.00  from holding Small Cap Value Series or generate 10.72% return on investment over 90 days.

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

Great West Loomis Sayles  vs.  Small Cap Value Series

Great West Loomis

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Loomis Sayles are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Great West may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Small Cap Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Value Series are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Small-cap Value may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Great West and Small-cap Value

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

The idea behind Great West Loomis Sayles and Small Cap Value Series 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.