Correlation Between Defensive Market and Guidestone Funds

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

By analyzing existing cross correlation between Defensive Market Strategies and Guidestone Funds Impact, you can compare the effects of market volatilities on Defensive Market and Guidestone Funds 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 Defensive Market with a short position of Guidestone Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defensive Market and Guidestone Funds.

Diversification Opportunities for Defensive Market and Guidestone Funds

0.96

Correlation Coefficient

Defensive Market  Guidestone Funds

Almost no diversification

The 3 months correlation between Defensive and Guidestone is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Defensive Market Strategies and Guidestone Funds Impact in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Funds Impact and Defensive Market 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 Defensive Market Strategies are associated (or correlated) with Guidestone Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Funds Impact has no effect on the direction of Defensive Market i.e., Defensive Market and Guidestone Funds go up and down completely randomly.

Pair Corralation between Defensive Market and Guidestone Funds

Assuming the 90 days horizon Defensive Market Strategies is expected to generate 0.84 times more return on investment than Guidestone Funds. However, Defensive Market Strategies is 1.19 times less risky than Guidestone Funds. It trades about -0.25 of its potential returns per unit of risk. Guidestone Funds Impact is currently generating about -0.23 per unit of risk. If you would invest  1,217  in Defensive Market Strategies on October 10, 2024 and sell it today you would lose (44.00) from holding Defensive Market Strategies or give up 3.62% of portfolio value over 90 days.

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

Defensive Market Strategies  vs.  Guidestone Funds Impact

Defensive Market Str

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defensive Market Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Guidestone Funds Impact

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidestone Funds Impact has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Defensive Market and Guidestone Funds

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

The idea behind Defensive Market Strategies and Guidestone Funds Impact 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.