Correlation Between Guidepath Managed and Invesco Balanced-risk

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

By analyzing existing cross correlation between Guidepath Managed Futures and Invesco Balanced Risk Allocation, you can compare the effects of market volatilities on Guidepath Managed and Invesco Balanced-risk 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 Managed with a short position of Invesco Balanced-risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Managed and Invesco Balanced-risk.

Diversification Opportunities for Guidepath Managed and Invesco Balanced-risk

-0.26

Correlation Coefficient

Guidepath Managed  Invesco Balanced-risk

Very good diversification

The 3 months correlation between Guidepath and Invesco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Invesco Balanced Risk Allocati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Balanced Risk and Guidepath Managed 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 Managed Futures are associated (or correlated) with Invesco Balanced-risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Balanced Risk has no effect on the direction of Guidepath Managed i.e., Guidepath Managed and Invesco Balanced-risk go up and down completely randomly.

Pair Corralation between Guidepath Managed and Invesco Balanced-risk

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Invesco Balanced-risk. In addition to that, Guidepath Managed is 2.55 times more volatile than Invesco Balanced Risk Allocation. It trades about -0.16 of its total potential returns per unit of risk. Invesco Balanced Risk Allocation is currently generating about -0.25 per unit of volatility. If you would invest  834.00  in Invesco Balanced Risk Allocation on December 9, 2024 and sell it today you would lose (18.00) from holding Invesco Balanced Risk Allocation or give up 2.16% of portfolio value over 90 days.

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

Guidepath Managed Futures  vs.  Invesco Balanced Risk Allocati

Guidepath Managed Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidepath Managed Futures has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guidepath Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Balanced Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Balanced Risk Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Invesco Balanced-risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guidepath Managed and Invesco Balanced-risk

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

The idea behind Guidepath Managed Futures and Invesco Balanced Risk Allocation 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.