Correlation Between Guidemark Large and Sierra E

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

Diversification Opportunities for Guidemark Large and Sierra E

0.13

Correlation Coefficient

Guidemark Large  Sierra E

Average diversification

The 3 months correlation between Guidemark and Sierra is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement 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 Sierra E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of Guidemark Large i.e., Guidemark Large and Sierra E go up and down completely randomly.

Pair Corralation between Guidemark Large and Sierra E

Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Sierra E. In addition to that, Guidemark Large is 2.17 times more volatile than Sierra E Retirement. It trades about -0.14 of its total potential returns per unit of risk. Sierra E Retirement is currently generating about -0.16 per unit of volatility. If you would invest  2,329  in Sierra E Retirement on September 29, 2024 and sell it today you would lose (35.00) from holding Sierra E Retirement or give up 1.5% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  Sierra E Retirement

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.

Sierra E Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sierra E Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sierra E 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 Sierra E

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

The idea behind Guidemark Large Cap and Sierra E Retirement 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.