Correlation Between Guardian Capital and Clarke

Can any of the company-specific risk be diversified away by investing in both Guardian Capital and Clarke 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 Clarke 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 Clarke Inc, you can compare the effects of market volatilities on Guardian Capital and Clarke 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 Clarke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Capital and Clarke.

Diversification Opportunities for Guardian Capital and Clarke

0.66

Correlation Coefficient

Guardian Capital  Clarke

Poor diversification

The 3 months correlation between Guardian and Clarke is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group and Clarke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarke Inc 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 Clarke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarke Inc has no effect on the direction of Guardian Capital i.e., Guardian Capital and Clarke go up and down completely randomly.

Pair Corralation between Guardian Capital and Clarke

Assuming the 90 days trading horizon Guardian Capital Group is expected to under-perform the Clarke. In addition to that, Guardian Capital is 2.08 times more volatile than Clarke Inc. It trades about -0.08 of its total potential returns per unit of risk. Clarke Inc is currently generating about -0.14 per unit of volatility. If you would invest  2,370  in Clarke Inc on December 30, 2024 and sell it today you would lose (151.00) from holding Clarke Inc or give up 6.37% of portfolio value over 90 days.

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

Guardian Capital Group  vs.  Clarke Inc

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. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Clarke Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarke Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Guardian Capital and Clarke

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

The idea behind Guardian Capital Group and Clarke Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.