Correlation Between Guidestone Growth and Low-duration Bond
Can any of the company-specific risk be diversified away by investing in both Guidestone Growth and Low-duration Bond 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 Guidestone Growth and Low-duration Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidestone Growth Equity and Low Duration Bond Investor, you can compare the effects of market volatilities on Guidestone Growth and Low-duration Bond 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 Guidestone Growth with a short position of Low-duration Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Growth and Low-duration Bond.
Diversification Opportunities for Guidestone Growth and Low-duration Bond
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Guidestone and Low-duration is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Growth Equity and Low Duration Bond Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Low Duration Bond and Guidestone Growth 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 Guidestone Growth Equity are associated (or correlated) with Low-duration Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Low Duration Bond has no effect on the direction of Guidestone Growth i.e., Guidestone Growth and Low-duration Bond go up and down completely randomly.
Pair Corralation between Guidestone Growth and Low-duration Bond
Assuming the 90 days horizon Guidestone Growth Equity is expected to under-perform the Low-duration Bond. In addition to that, Guidestone Growth is 15.71 times more volatile than Low Duration Bond Investor. It trades about -0.1 of its total potential returns per unit of risk. Low Duration Bond Investor is currently generating about 0.2 per unit of volatility. If you would invest 1,277 in Low Duration Bond Investor on December 28, 2024 and sell it today you would earn a total of 14.00 from holding Low Duration Bond Investor or generate 1.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Guidestone Growth Equity vs. Low Duration Bond Investor
Performance |
Timeline |
Guidestone Growth Equity |
Low Duration Bond |
Guidestone Growth and Low-duration Bond Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guidestone Growth and Low-duration Bond
The main advantage of trading using opposite Guidestone Growth and Low-duration Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Growth position performs unexpectedly, Low-duration Bond 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 Low-duration Bond will offset losses from the drop in Low-duration Bond's long position.Guidestone Growth vs. Transamerica International Small | Guidestone Growth vs. Foundry Partners Fundamental | Guidestone Growth vs. Federated Clover Small | Guidestone Growth vs. Aqr Small Cap |
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Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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