Correlation Between Guidemark(r) Large and Materials Portfolio

Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Large and Materials Portfolio 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 Guidemark(r) Large and Materials Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidemark Large Cap and Materials Portfolio Fidelity, you can compare the effects of market volatilities on Guidemark(r) Large and Materials Portfolio 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 Guidemark(r) Large with a short position of Materials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Large and Materials Portfolio.

Diversification Opportunities for Guidemark(r) Large and Materials Portfolio

0.57

Correlation Coefficient

Guidemark(r) Large  Materials Portfolio

Very weak diversification

The 3 months correlation between Guidemark(r) and Materials is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Materials Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Portfolio and Guidemark(r) Large 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 Guidemark Large Cap are associated (or correlated) with Materials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Portfolio has no effect on the direction of Guidemark(r) Large i.e., Guidemark(r) Large and Materials Portfolio go up and down completely randomly.

Pair Corralation between Guidemark(r) Large and Materials Portfolio

Assuming the 90 days horizon Guidemark Large Cap is expected to generate 0.76 times more return on investment than Materials Portfolio. However, Guidemark Large Cap is 1.32 times less risky than Materials Portfolio. It trades about -0.11 of its potential returns per unit of risk. Materials Portfolio Fidelity is currently generating about -0.13 per unit of risk. If you would invest  3,450  in Guidemark Large Cap on October 23, 2024 and sell it today you would lose (102.00) from holding Guidemark Large Cap or give up 2.96% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  Materials Portfolio Fidelity

Guidemark Large Cap

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidemark(r) Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Materials Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Portfolio Fidelity 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Guidemark(r) Large and Materials Portfolio

The main advantage of trading using opposite Guidemark(r) Large and Materials Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark(r) Large position performs unexpectedly, Materials Portfolio 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 Materials Portfolio will offset losses from the drop in Materials Portfolio's long position.

The idea behind Guidemark Large Cap and Materials Portfolio Fidelity 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.