Correlation Between Guidemark Large and Citizensselect Funds

Can any of the company-specific risk be diversified away by investing in both Guidemark Large and Citizensselect Funds 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 Large and Citizensselect Funds 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 Citizensselect Funds , you can compare the effects of market volatilities on Guidemark Large and Citizensselect Funds 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 Large with a short position of Citizensselect Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Citizensselect Funds.

Diversification Opportunities for Guidemark Large and Citizensselect Funds

-0.54

Correlation Coefficient

Guidemark Large  Citizensselect Funds

Excellent diversification

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

Pair Corralation between Guidemark Large and Citizensselect Funds

Assuming the 90 days horizon Guidemark Large is expected to generate 1.93 times less return on investment than Citizensselect Funds. But when comparing it to its historical volatility, Guidemark Large Cap is 1.18 times less risky than Citizensselect Funds. It trades about 0.01 of its potential returns per unit of risk. Citizensselect Funds is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Citizensselect Funds on October 15, 2024 and sell it today you would earn a total of  9.00  from holding Citizensselect Funds or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Guidemark Large Cap  vs.  Citizensselect Funds

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Citizensselect Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizensselect Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Citizensselect Funds is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guidemark Large and Citizensselect Funds

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

The idea behind Guidemark Large Cap and Citizensselect Funds 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.