Correlation Between Emerging Markets and Guidestone Value
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Guidestone Value 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 Emerging Markets and Guidestone Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Equity and Guidestone Value Equity, you can compare the effects of market volatilities on Emerging Markets and Guidestone Value 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 Emerging Markets with a short position of Guidestone Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Guidestone Value.
Diversification Opportunities for Emerging Markets and Guidestone Value
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerging and Guidestone is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Equity and Guidestone Value Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Value Equity and Emerging Markets 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 Emerging Markets Equity are associated (or correlated) with Guidestone Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Value Equity has no effect on the direction of Emerging Markets i.e., Emerging Markets and Guidestone Value go up and down completely randomly.
Pair Corralation between Emerging Markets and Guidestone Value
Assuming the 90 days horizon Emerging Markets Equity is expected to generate 0.84 times more return on investment than Guidestone Value. However, Emerging Markets Equity is 1.19 times less risky than Guidestone Value. It trades about -0.01 of its potential returns per unit of risk. Guidestone Value Equity is currently generating about -0.12 per unit of risk. If you would invest 978.00 in Emerging Markets Equity on December 5, 2024 and sell it today you would lose (7.00) from holding Emerging Markets Equity or give up 0.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Emerging Markets Equity vs. Guidestone Value Equity
Performance |
Timeline |
Emerging Markets Equity |
Guidestone Value Equity |
Emerging Markets and Guidestone Value Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerging Markets and Guidestone Value
The main advantage of trading using opposite Emerging Markets and Guidestone Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Guidestone Value 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 Value will offset losses from the drop in Guidestone Value's long position.Emerging Markets vs. John Hancock Financial | Emerging Markets vs. Fidelity Advisor Financial | Emerging Markets vs. Gabelli Global Financial | Emerging Markets vs. Vanguard Financials Index |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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