Correlation Between Guidepath Managed and Moderate Duration

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

Diversification Opportunities for Guidepath Managed and Moderate Duration

-0.49

Correlation Coefficient

Guidepath Managed  Moderate Duration

Very good diversification

The 3 months correlation between Guidepath and Moderate is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Moderate Duration Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Duration 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 Moderate Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Duration has no effect on the direction of Guidepath Managed i.e., Guidepath Managed and Moderate Duration go up and down completely randomly.

Pair Corralation between Guidepath Managed and Moderate Duration

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Moderate Duration. In addition to that, Guidepath Managed is 3.35 times more volatile than Moderate Duration Fund. It trades about -0.01 of its total potential returns per unit of risk. Moderate Duration Fund is currently generating about 0.1 per unit of volatility. If you would invest  940.00  in Moderate Duration Fund on September 17, 2024 and sell it today you would earn a total of  45.00  from holding Moderate Duration Fund or generate 4.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.23%
Values	Daily Returns

Guidepath Managed Futures  vs.  Moderate Duration Fund

Guidepath Managed Futures

Risk-Adjusted Performance

0 of 100

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.

Moderate Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moderate Duration Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Moderate Duration 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 Moderate Duration

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

The idea behind Guidepath Managed Futures and Moderate Duration Fund 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.