Correlation Between Edgepoint Global and Guardian Investment

Can any of the company-specific risk be diversified away by investing in both Edgepoint Global and Guardian Investment 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 Edgepoint Global and Guardian Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Edgepoint Global Portfolio and Guardian Investment Grade, you can compare the effects of market volatilities on Edgepoint Global and Guardian Investment 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 Edgepoint Global with a short position of Guardian Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgepoint Global and Guardian Investment.

Diversification Opportunities for Edgepoint Global and Guardian Investment

0.22

Correlation Coefficient

Edgepoint Global  Guardian Investment

Modest diversification

The 3 months correlation between Edgepoint and Guardian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Global Portfolio and Guardian Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Investment Grade and Edgepoint Global 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 Edgepoint Global Portfolio are associated (or correlated) with Guardian Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Investment Grade has no effect on the direction of Edgepoint Global i.e., Edgepoint Global and Guardian Investment go up and down completely randomly.

Pair Corralation between Edgepoint Global and Guardian Investment

Assuming the 90 days trading horizon Edgepoint Global is expected to generate 3.88 times less return on investment than Guardian Investment. But when comparing it to its historical volatility, Edgepoint Global Portfolio is 2.19 times less risky than Guardian Investment. It trades about 0.08 of its potential returns per unit of risk. Guardian Investment Grade is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,166  in Guardian Investment Grade on December 26, 2024 and sell it today you would earn a total of  280.00  from holding Guardian Investment Grade or generate 12.93% return on investment over 90 days.

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

Edgepoint Global Portfolio  vs.  Guardian Investment Grade

Edgepoint Global Por

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Global Portfolio are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong forward indicators, Edgepoint Global is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Guardian Investment Grade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Investment Grade are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, Guardian Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edgepoint Global and Guardian Investment

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

The idea behind Edgepoint Global Portfolio and Guardian Investment Grade 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.