Correlation Between Guidepath Conservative and State Street

Can any of the company-specific risk be diversified away by investing in both Guidepath Conservative and State Street 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 State Street 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 State Street Global, you can compare the effects of market volatilities on Guidepath Conservative and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Conservative and State Street.

Diversification Opportunities for Guidepath Conservative and State Street

0.9

Correlation Coefficient

Guidepath Conservative  State Street

Almost no diversification

The 3 months correlation between Guidepath and State is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Conservative Income and State Street Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Global 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Global has no effect on the direction of Guidepath Conservative i.e., Guidepath Conservative and State Street go up and down completely randomly.

Pair Corralation between Guidepath Conservative and State Street

Assuming the 90 days horizon Guidepath Conservative is expected to generate 10.59 times less return on investment than State Street. But when comparing it to its historical volatility, Guidepath Conservative Income is 12.53 times less risky than State Street. It trades about 0.17 of its potential returns per unit of risk. State Street Global is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10,338  in State Street Global on December 21, 2024 and sell it today you would earn a total of  700.00  from holding State Street Global or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Guidepath Conservative Income  vs.  State Street Global

Guidepath Conservative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Conservative Income are ranked lower than 13 (%) 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.

State Street Global

Risk-Adjusted Performance

Good

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

Pair Trading with Guidepath Conservative and State Street

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

The idea behind Guidepath Conservative Income and State Street Global 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.