Correlation Between Guidemark Smallmid and Victory Floating

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

Diversification Opportunities for Guidemark Smallmid and Victory Floating

0.79

Correlation Coefficient

Guidemark Smallmid  Victory Floating

Poor diversification

The 3 months correlation between Guidemark and Victory is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Victory Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Floating Rate 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 Victory Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Floating Rate has no effect on the direction of Guidemark Smallmid i.e., Guidemark Smallmid and Victory Floating go up and down completely randomly.

Pair Corralation between Guidemark Smallmid and Victory Floating

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to generate 6.59 times more return on investment than Victory Floating. However, Guidemark Smallmid is 6.59 times more volatile than Victory Floating Rate. It trades about 0.15 of its potential returns per unit of risk. Victory Floating Rate is currently generating about 0.25 per unit of risk. If you would invest  2,058  in Guidemark Smallmid Cap on September 14, 2024 and sell it today you would earn a total of  211.00  from holding Guidemark Smallmid Cap or generate 10.25% return on investment over 90 days.

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

Guidemark Smallmid Cap  vs.  Victory Floating Rate

Guidemark Smallmid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Victory Floating Rate

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Floating Rate are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Victory Floating 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 Victory Floating

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

The idea behind Guidemark Smallmid Cap and Victory Floating Rate 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.