Correlation Between Guidemark(r) Large and Guidemark(r) Core

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

Diversification Opportunities for Guidemark(r) Large and Guidemark(r) Core

-0.02

Correlation Coefficient

Guidemark(r) Large  Guidemark(r) Core

Good diversification

The 3 months correlation between Guidemark(r) and Guidemark(r) is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Guidemark E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark E Fixed 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 Guidemark(r) Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark E Fixed has no effect on the direction of Guidemark(r) Large i.e., Guidemark(r) Large and Guidemark(r) Core go up and down completely randomly.

Pair Corralation between Guidemark(r) Large and Guidemark(r) Core

Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Guidemark(r) Core. In addition to that, Guidemark(r) Large is 4.12 times more volatile than Guidemark E Fixed. It trades about -0.28 of its total potential returns per unit of risk. Guidemark E Fixed is currently generating about -0.41 per unit of volatility. If you would invest  832.00  in Guidemark E Fixed on October 6, 2024 and sell it today you would lose (23.00) from holding Guidemark E Fixed or give up 2.76% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  Guidemark E Fixed

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.

Guidemark E Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark E Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guidemark(r) Core 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 Guidemark(r) Core

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

The idea behind Guidemark Large Cap and Guidemark E Fixed 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.