Correlation Between Guidemark(r) World and Guidemark(r) Large

Can any of the company-specific risk be diversified away by investing in both Guidemark(r) World and Guidemark(r) Large 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(r) World and Guidemark(r) Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidemark World Ex Us and Guidemark Large Cap, you can compare the effects of market volatilities on Guidemark(r) World and Guidemark(r) Large 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(r) World with a short position of Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) World and Guidemark(r) Large.

Diversification Opportunities for Guidemark(r) World and Guidemark(r) Large

-0.47

Correlation Coefficient

Guidemark(r) World  Guidemark(r) Large

Very good diversification

The 3 months correlation between Guidemark(r) and GUIDEMARK(R) is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark World Ex Us and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap and Guidemark(r) World 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 World Ex Us are associated (or correlated) with Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Guidemark(r) World i.e., Guidemark(r) World and Guidemark(r) Large go up and down completely randomly.

Pair Corralation between Guidemark(r) World and Guidemark(r) Large

Assuming the 90 days horizon Guidemark World Ex Us is expected to generate 0.67 times more return on investment than Guidemark(r) Large. However, Guidemark World Ex Us is 1.49 times less risky than Guidemark(r) Large. It trades about 0.2 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about -0.12 per unit of risk. If you would invest  1,045  in Guidemark World Ex Us on December 25, 2024 and sell it today you would earn a total of  101.00  from holding Guidemark World Ex Us or generate 9.67% return on investment over 90 days.

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

Guidemark World Ex Us  vs.  Guidemark Large Cap

Guidemark World Ex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark World Ex Us are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Guidemark(r) World may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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

Pair Trading with Guidemark(r) World and Guidemark(r) Large

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

The idea behind Guidemark World Ex Us and Guidemark Large Cap 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.