Correlation Between Guild Holdings and Federal National

Can any of the company-specific risk be diversified away by investing in both Guild Holdings and Federal National 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 Guild Holdings and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guild Holdings Co and Federal National Mortgage, you can compare the effects of market volatilities on Guild Holdings and Federal National 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 Guild Holdings with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Holdings and Federal National.

Diversification Opportunities for Guild Holdings and Federal National

-0.52

Correlation Coefficient

Guild Holdings  Federal National

Excellent diversification

The 3 months correlation between Guild and Federal is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Guild Holdings Co and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and Guild Holdings 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 Guild Holdings Co are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Guild Holdings i.e., Guild Holdings and Federal National go up and down completely randomly.

Pair Corralation between Guild Holdings and Federal National

Given the investment horizon of 90 days Guild Holdings is expected to generate 38.99 times less return on investment than Federal National. But when comparing it to its historical volatility, Guild Holdings Co is 2.98 times less risky than Federal National. It trades about 0.01 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  339.00  in Federal National Mortgage on December 28, 2024 and sell it today you would earn a total of  357.00  from holding Federal National Mortgage or generate 105.31% return on investment over 90 days.

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

Guild Holdings Co  vs.  Federal National Mortgage

Guild Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Holdings Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Guild Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Federal National Mortgage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Federal National sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guild Holdings and Federal National

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

The idea behind Guild Holdings Co and Federal National Mortgage 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.