Correlation Between Guardian Investment and CDSPI Corporate

Can any of the company-specific risk be diversified away by investing in both Guardian Investment and CDSPI Corporate 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 Guardian Investment and CDSPI Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardian Investment Grade and CDSPI Corporate Bond, you can compare the effects of market volatilities on Guardian Investment and CDSPI Corporate 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 Guardian Investment with a short position of CDSPI Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Investment and CDSPI Corporate.

Diversification Opportunities for Guardian Investment and CDSPI Corporate

0.54

Correlation Coefficient

Guardian Investment  CDSPI Corporate

Very weak diversification

The 3 months correlation between Guardian and CDSPI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Investment Grade and CDSPI Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI Corporate Bond and Guardian Investment 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 Guardian Investment Grade are associated (or correlated) with CDSPI Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI Corporate Bond has no effect on the direction of Guardian Investment i.e., Guardian Investment and CDSPI Corporate go up and down completely randomly.

Pair Corralation between Guardian Investment and CDSPI Corporate

Assuming the 90 days trading horizon Guardian Investment Grade is expected to generate 8.48 times more return on investment than CDSPI Corporate. However, Guardian Investment is 8.48 times more volatile than CDSPI Corporate Bond. It trades about 0.14 of its potential returns per unit of risk. CDSPI Corporate Bond is currently generating about 0.14 per unit of risk. If you would invest  2,166  in Guardian Investment Grade on December 24, 2024 and sell it today you would earn a total of  280.00  from holding Guardian Investment Grade or generate 12.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Guardian Investment Grade  vs.  CDSPI Corporate Bond

Guardian Investment Grade

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Investment Grade are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, Guardian Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

CDSPI Corporate Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CDSPI Corporate Bond are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady forward-looking indicators, CDSPI Corporate is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Guardian Investment and CDSPI Corporate

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

The idea behind Guardian Investment Grade and CDSPI Corporate Bond 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.