Correlation Between Guidepath Managed and Guidepath Flexible

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

Diversification Opportunities for Guidepath Managed and Guidepath Flexible

0.63

Correlation Coefficient

Guidepath Managed  Guidepath Flexible

Poor diversification

The 3 months correlation between Guidepath and Guidepath is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Guidepath Flexible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Flexible Income 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 Guidepath Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Flexible Income has no effect on the direction of Guidepath Managed i.e., Guidepath Managed and Guidepath Flexible go up and down completely randomly.

Pair Corralation between Guidepath Managed and Guidepath Flexible

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Guidepath Flexible. In addition to that, Guidepath Managed is 2.55 times more volatile than Guidepath Flexible Income. It trades about -0.06 of its total potential returns per unit of risk. Guidepath Flexible Income is currently generating about -0.03 per unit of volatility. If you would invest  912.00  in Guidepath Flexible Income on September 15, 2024 and sell it today you would lose (4.00) from holding Guidepath Flexible Income or give up 0.44% of portfolio value over 90 days.

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

Guidepath Managed Futures  vs.  Guidepath Flexible Income

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.

Guidepath Flexible Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidepath Flexible Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guidepath Flexible 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 Guidepath Flexible

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

The idea behind Guidepath Managed Futures and Guidepath Flexible Income 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.