Correlation Between Guidemark Smallmid and Qs Defensive

Can any of the company-specific risk be diversified away by investing in both Guidemark Smallmid and Qs Defensive 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 Smallmid and Qs Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidemark Smallmid Cap and Qs Defensive Growth, you can compare the effects of market volatilities on Guidemark Smallmid and Qs Defensive 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 Smallmid with a short position of Qs Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Smallmid and Qs Defensive.

Diversification Opportunities for Guidemark Smallmid and Qs Defensive

0.34

Correlation Coefficient

Guidemark Smallmid  Qs Defensive

Weak diversification

The 3 months correlation between Guidemark and LMLRX is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Qs Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Defensive Growth and Guidemark Smallmid 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 Smallmid Cap are associated (or correlated) with Qs Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Defensive Growth has no effect on the direction of Guidemark Smallmid i.e., Guidemark Smallmid and Qs Defensive go up and down completely randomly.

Pair Corralation between Guidemark Smallmid and Qs Defensive

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to under-perform the Qs Defensive. In addition to that, Guidemark Smallmid is 3.04 times more volatile than Qs Defensive Growth. It trades about -0.37 of its total potential returns per unit of risk. Qs Defensive Growth is currently generating about -0.16 per unit of volatility. If you would invest  1,320  in Qs Defensive Growth on December 10, 2024 and sell it today you would lose (16.00) from holding Qs Defensive Growth or give up 1.21% of portfolio value over 90 days.

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

Guidemark Smallmid Cap  vs.  Qs Defensive Growth

Guidemark Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidemark Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Qs Defensive Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qs Defensive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Qs Defensive 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 Smallmid and Qs Defensive

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

The idea behind Guidemark Smallmid Cap and Qs Defensive Growth 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.