Correlation Between Guidepath Conservative and Kngt Clb

Can any of the company-specific risk be diversified away by investing in both Guidepath Conservative and Kngt Clb 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 Guidepath Conservative and Kngt Clb into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidepath Conservative Income and Kngt Clb Larg, you can compare the effects of market volatilities on Guidepath Conservative and Kngt Clb 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 Guidepath Conservative with a short position of Kngt Clb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Conservative and Kngt Clb.

Diversification Opportunities for Guidepath Conservative and Kngt Clb

0.63

Correlation Coefficient

Guidepath Conservative  Kngt Clb

Poor diversification

The 3 months correlation between Guidepath and Kngt is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Conservative Income and Kngt Clb Larg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Larg and Guidepath Conservative 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 Guidepath Conservative Income are associated (or correlated) with Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Larg has no effect on the direction of Guidepath Conservative i.e., Guidepath Conservative and Kngt Clb go up and down completely randomly.

Pair Corralation between Guidepath Conservative and Kngt Clb

Assuming the 90 days horizon Guidepath Conservative is expected to generate 2.66 times less return on investment than Kngt Clb. But when comparing it to its historical volatility, Guidepath Conservative Income is 23.78 times less risky than Kngt Clb. It trades about 0.52 of its potential returns per unit of risk. Kngt Clb Larg is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,155  in Kngt Clb Larg on October 25, 2024 and sell it today you would earn a total of  23.00  from holding Kngt Clb Larg or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Guidepath Conservative Income  vs.  Kngt Clb Larg

Guidepath Conservative

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Conservative Income are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Guidepath Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kngt Clb Larg

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kngt Clb Larg are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Kngt Clb may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guidepath Conservative and Kngt Clb

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

The idea behind Guidepath Conservative Income and Kngt Clb Larg 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.