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

-0.73

Correlation Coefficient

Guild Holdings  Federal National

Pay attention - limited upside

The 3 months correlation between Guild and Federal is -0.73. 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 Co is expected to under-perform the Federal National. But the stock apears to be less risky and, when comparing its historical volatility, Guild Holdings Co is 4.82 times less risky than Federal National. The stock trades about -0.11 of its potential returns per unit of risk. The Federal National Mortgage is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  425.00  in Federal National Mortgage on October 23, 2024 and sell it today you would earn a total of  641.00  from holding Federal National Mortgage or generate 150.82% return on investment over 90 days.

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

Guild Holdings Co  vs.  Federal National Mortgage

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Federal National Mortgage

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Federal National revealed 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.