Correlation Between Equity Index and Guidestone Fds

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

By analyzing existing cross correlation between Equity Index Investor and Guidestone Fds Growth, you can compare the effects of market volatilities on Equity Index and Guidestone Fds 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 Equity Index with a short position of Guidestone Fds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Index and Guidestone Fds.

Diversification Opportunities for Equity Index and Guidestone Fds

0.72

Correlation Coefficient

Equity Index  Guidestone Fds

Poor diversification

The 3 months correlation between Equity and Guidestone is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Equity Index Investor and Guidestone Fds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Fds Growth and Equity Index 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 Equity Index Investor are associated (or correlated) with Guidestone Fds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Fds Growth has no effect on the direction of Equity Index i.e., Equity Index and Guidestone Fds go up and down completely randomly.

Pair Corralation between Equity Index and Guidestone Fds

Assuming the 90 days horizon Equity Index Investor is expected to generate 0.53 times more return on investment than Guidestone Fds. However, Equity Index Investor is 1.88 times less risky than Guidestone Fds. It trades about -0.1 of its potential returns per unit of risk. Guidestone Fds Growth is currently generating about -0.18 per unit of risk. If you would invest  6,179  in Equity Index Investor on December 5, 2024 and sell it today you would lose (356.00) from holding Equity Index Investor or give up 5.76% of portfolio value over 90 days.

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

Equity Index Investor  vs.  Guidestone Fds Growth

Equity Index Investor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Index Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Equity Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidestone Fds Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidestone Fds Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Equity Index and Guidestone Fds

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

The idea behind Equity Index Investor and Guidestone Fds Growth 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.