Correlation Between Guidemark(r) Large and Federated Short

Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Large and Federated Short 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 Federated Short 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 Federated Short Term Income, you can compare the effects of market volatilities on Guidemark(r) Large and Federated Short 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 Federated Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Large and Federated Short.

Diversification Opportunities for Guidemark(r) Large and Federated Short

0.31

Correlation Coefficient

Guidemark(r) Large  Federated Short

Weak diversification

The 3 months correlation between Guidemark(r) and Federated is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term 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 Federated Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Guidemark(r) Large i.e., Guidemark(r) Large and Federated Short go up and down completely randomly.

Pair Corralation between Guidemark(r) Large and Federated Short

Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Federated Short. In addition to that, Guidemark(r) Large is 17.68 times more volatile than Federated Short Term Income. It trades about -0.22 of its total potential returns per unit of risk. Federated Short Term Income is currently generating about -0.29 per unit of volatility. If you would invest  850.00  in Federated Short Term Income on October 8, 2024 and sell it today you would lose (4.00) from holding Federated Short Term Income or give up 0.47% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  Federated Short Term Income

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark Large Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.

Federated Short Term

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Guidemark(r) Large and Federated Short

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

The idea behind Guidemark Large Cap and Federated Short Term Income 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.