Correlation Between Guidemark Large and Pimco Extended

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

Diversification Opportunities for Guidemark Large and Pimco Extended

0.41

Correlation Coefficient

Guidemark Large  Pimco Extended

Very weak diversification

The 3 months correlation between Guidemark and Pimco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration 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 Pimco Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of Guidemark Large i.e., Guidemark Large and Pimco Extended go up and down completely randomly.

Pair Corralation between Guidemark Large and Pimco Extended

Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Pimco Extended. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidemark Large Cap is 1.49 times less risky than Pimco Extended. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Pimco Extended Duration is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,408  in Pimco Extended Duration on December 4, 2024 and sell it today you would lose (22.00) from holding Pimco Extended Duration or give up 1.56% 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.  Pimco Extended Duration

Guidemark Large Cap

Risk-Adjusted Performance

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 basic indicators, Guidemark Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Extended Duration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Extended Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Extended 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 Large and Pimco Extended

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

The idea behind Guidemark Large Cap and Pimco Extended Duration 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.