Correlation Between Guardian Capital and Flow Capital

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

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

Diversification Opportunities for Guardian Capital and Flow Capital

-0.03

Correlation Coefficient

Guardian Capital  Flow Capital

Good diversification

The 3 months correlation between Guardian and Flow is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and Guardian 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 Guardian Capital Group are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of Guardian Capital i.e., Guardian Capital and Flow Capital go up and down completely randomly.

Pair Corralation between Guardian Capital and Flow Capital

Assuming the 90 days horizon Guardian Capital Group is expected to generate 0.71 times more return on investment than Flow Capital. However, Guardian Capital Group is 1.4 times less risky than Flow Capital. It trades about -0.06 of its potential returns per unit of risk. Flow Capital Corp is currently generating about -0.13 per unit of risk. If you would invest  3,062  in Guardian Capital Group on December 29, 2024 and sell it today you would lose (137.00) from holding Guardian Capital Group or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

Guardian Capital Group  vs.  Flow Capital Corp

Guardian Capital

Risk-Adjusted Performance

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.

Flow Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Guardian Capital and Flow Capital

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

The idea behind Guardian Capital Group and Flow Capital Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.