Correlation Between Guidepath(r) Managed and Old Westbury

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

Diversification Opportunities for Guidepath(r) Managed and Old Westbury

0.69

Correlation Coefficient

Guidepath(r) Managed  Old Westbury

Poor diversification

The 3 months correlation between Guidepath(r) and Old is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Old Westbury go up and down completely randomly.

Pair Corralation between Guidepath(r) Managed and Old Westbury

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Old Westbury. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidepath Managed Futures is 1.12 times less risky than Old Westbury. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Old Westbury Large is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,991  in Old Westbury Large on December 30, 2024 and sell it today you would lose (65.00) from holding Old Westbury Large or give up 3.26% 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.  Old Westbury Large

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

Old Westbury Large

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Guidepath Managed Futures and Old Westbury Large 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.