Correlation Between Guidemark(r) Large and Rising Rates

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

Diversification Opportunities for Guidemark(r) Large and Rising Rates

0.07

Correlation Coefficient

Guidemark(r) Large  Rising Rates

Significant diversification

The 3 months correlation between Guidemark(r) and Rising is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Rising Rates Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Rates Opportunity 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 Rising Rates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Rates Opportunity has no effect on the direction of Guidemark(r) Large i.e., Guidemark(r) Large and Rising Rates go up and down completely randomly.

Pair Corralation between Guidemark(r) Large and Rising Rates

Assuming the 90 days horizon Guidemark(r) Large is expected to generate 24.43 times less return on investment than Rising Rates. But when comparing it to its historical volatility, Guidemark Large Cap is 1.0 times less risky than Rising Rates. It trades about 0.01 of its potential returns per unit of risk. Rising Rates Opportunity is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,592  in Rising Rates Opportunity on October 8, 2024 and sell it today you would earn a total of  388.00  from holding Rising Rates Opportunity or generate 10.8% return on investment over 90 days.

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

Guidemark Large Cap  vs.  Rising Rates Opportunity

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

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.

Rising Rates Opportunity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Rates Opportunity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rising Rates may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guidemark(r) Large and Rising Rates

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

The idea behind Guidemark Large Cap and Rising Rates Opportunity 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 Global Correlations module to find global opportunities by holding instruments from different markets.