Correlation Between Guidepath(r) Managed and Large Cap

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

Diversification Opportunities for Guidepath(r) Managed and Large Cap

-0.39

Correlation Coefficient

Guidepath(r) Managed  Large Cap

Very good diversification

The 3 months correlation between Guidepath(r) and Large is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Large Cap International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap International 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap International has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Large Cap go up and down completely randomly.

Pair Corralation between Guidepath(r) Managed and Large Cap

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Large Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidepath Managed Futures is 1.25 times less risky than Large Cap. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Large Cap International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,731  in Large Cap International on October 26, 2024 and sell it today you would earn a total of  45.00  from holding Large Cap International or generate 1.65% return on investment over 90 days.

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

Guidepath Managed Futures  vs.  Large Cap International

Guidepath Managed Futures

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Managed Futures are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidepath(r) Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Large Cap International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Large Cap International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Large Cap 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 Large Cap

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

The idea behind Guidepath Managed Futures and Large Cap International 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.