Correlation Between Guardian Directed and First Asset

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

By analyzing existing cross correlation between Guardian Directed Premium and First Asset Energy, you can compare the effects of market volatilities on Guardian Directed and First Asset 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 Directed with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Directed and First Asset.

Diversification Opportunities for Guardian Directed and First Asset

0.12

Correlation Coefficient

Guardian Directed  First Asset

Average diversification

The 3 months correlation between Guardian and First is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Directed Premium and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and Guardian Directed 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 Directed Premium are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of Guardian Directed i.e., Guardian Directed and First Asset go up and down completely randomly.

Pair Corralation between Guardian Directed and First Asset

Assuming the 90 days trading horizon Guardian Directed Premium is expected to generate 0.68 times more return on investment than First Asset. However, Guardian Directed Premium is 1.47 times less risky than First Asset. It trades about 0.2 of its potential returns per unit of risk. First Asset Energy is currently generating about -0.02 per unit of risk. If you would invest  2,109  in Guardian Directed Premium on September 5, 2024 and sell it today you would earn a total of  59.00  from holding Guardian Directed Premium or generate 2.8% return on investment over 90 days.

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

Guardian Directed Premium  vs.  First Asset Energy

Guardian Directed Premium

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Directed Premium are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Guardian Directed may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Asset Energy

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days First Asset Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Guardian Directed and First Asset

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

The idea behind Guardian Directed Premium and First Asset Energy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.