Correlation Between Guidepath(r) Managed and The Bond

Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed and The Bond 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(r) Managed and The Bond 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 The Bond Fund, you can compare the effects of market volatilities on Guidepath(r) Managed and The Bond 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(r) Managed with a short position of The Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and The Bond.

Diversification Opportunities for Guidepath(r) Managed and The Bond

0.84

Correlation Coefficient

Guidepath(r) Managed  The Bond

Very poor diversification

The 3 months correlation between Guidepath(r) and The is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and The Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and Guidepath(r) 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 The Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and The Bond go up and down completely randomly.

Pair Corralation between Guidepath(r) Managed and The Bond

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the The Bond. In addition to that, Guidepath(r) Managed is 1.76 times more volatile than The Bond Fund. It trades about -0.04 of its total potential returns per unit of risk. The Bond Fund is currently generating about -0.03 per unit of volatility. If you would invest  1,808  in The Bond Fund on September 2, 2024 and sell it today you would lose (10.00) from holding The Bond Fund or give up 0.55% of portfolio value over 90 days.

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

Guidepath Managed Futures  vs.  The Bond 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(r) Managed is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Bond 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(r) Managed and The Bond

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

The idea behind Guidepath Managed Futures and The Bond 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.