Correlation Between Vanguard Short and Great West

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

By analyzing existing cross correlation between Vanguard Short Term Inflation Protected and Great West Inflation Protected Securities, you can compare the effects of market volatilities on Vanguard Short 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 Vanguard Short with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short and Great West.

Diversification Opportunities for Vanguard Short and Great West

0.95

Correlation Coefficient

Vanguard Short  Great West

Almost no diversification

The 3 months correlation between Vanguard and Great is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Inflation and Great West Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Inflation and Vanguard Short 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 Short Term Inflation Protected 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 Inflation has no effect on the direction of Vanguard Short i.e., Vanguard Short and Great West go up and down completely randomly.

Pair Corralation between Vanguard Short and Great West

Assuming the 90 days horizon Vanguard Short is expected to generate 1.24 times less return on investment than Great West. But when comparing it to its historical volatility, Vanguard Short Term Inflation Protected is 1.6 times less risky than Great West. It trades about 0.18 of its potential returns per unit of risk. Great West Inflation Protected Securities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Great West Inflation Protected Securities on May 4, 2025 and sell it today you would earn a total of  16.00  from holding Great West Inflation Protected Securities or generate 1.74% return on investment over 90 days.

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

Vanguard Short Term Inflation   vs.  Great West Inflation Protected

Vanguard Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Inflation Protected are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Inflation Protected Securities are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Great West 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 Short and Great West

The main advantage of trading using opposite Vanguard Short and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short 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 Vanguard Short Term Inflation Protected and Great West Inflation Protected Securities 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.