Correlation Between Flow Capital and Guardian Capital

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

By analyzing existing cross correlation between Flow Capital Corp and Guardian Capital Group, you can compare the effects of market volatilities on Flow Capital and Guardian Capital 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 Flow Capital with a short position of Guardian Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Capital and Guardian Capital.

Diversification Opportunities for Flow Capital and Guardian Capital

-0.38

Correlation Coefficient

Flow Capital  Guardian Capital

Very good diversification

The 3 months correlation between Flow and Guardian is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Flow Capital Corp and Guardian Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Capital and Flow Capital 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 Flow Capital Corp are associated (or correlated) with Guardian Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Capital has no effect on the direction of Flow Capital i.e., Flow Capital and Guardian Capital go up and down completely randomly.

Pair Corralation between Flow Capital and Guardian Capital

If you would invest  2,881  in Guardian Capital Group on August 31, 2024 and sell it today you would earn a total of  39.00  from holding Guardian Capital Group or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Flow Capital Corp  vs.  Guardian Capital Group

Flow Capital Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Capital Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Flow Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Guardian Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardian Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guardian Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Flow Capital and Guardian Capital

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

The idea behind Flow Capital Corp and Guardian Capital Group 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.