Correlation Between Guidepath(r) Managed and Thornburg Low

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

Diversification Opportunities for Guidepath(r) Managed and Thornburg Low

0.68

Correlation Coefficient

Guidepath(r) Managed  Thornburg Low

Poor diversification

The 3 months correlation between Guidepath(r) and Thornburg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Thornburg Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Low Duration 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 Thornburg Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Low Duration has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Thornburg Low go up and down completely randomly.

Pair Corralation between Guidepath(r) Managed and Thornburg Low

Assuming the 90 days horizon Guidepath Managed Futures is expected to generate 5.42 times more return on investment than Thornburg Low. However, Guidepath(r) Managed is 5.42 times more volatile than Thornburg Low Duration. It trades about 0.05 of its potential returns per unit of risk. Thornburg Low Duration is currently generating about 0.19 per unit of risk. If you would invest  779.00  in Guidepath Managed Futures on October 25, 2024 and sell it today you would earn a total of  13.00  from holding Guidepath Managed Futures or generate 1.67% return on investment over 90 days.

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

Guidepath Managed Futures  vs.  Thornburg Low Duration

Guidepath Managed Futures

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Managed Futures are ranked lower than 3 (%) 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.

Thornburg Low Duration

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Low Duration are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thornburg Low 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 Thornburg Low

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

The idea behind Guidepath Managed Futures and Thornburg Low Duration 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.