Correlation Between Value Equity and Guidestone Funds

Can any of the company-specific risk be diversified away by investing in both Value Equity and Guidestone Funds 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 Value Equity and Guidestone Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Value Equity Investor and Guidestone Funds , you can compare the effects of market volatilities on Value Equity and Guidestone Funds 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 Value Equity with a short position of Guidestone Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Equity and Guidestone Funds.

Diversification Opportunities for Value Equity and Guidestone Funds

-0.32

Correlation Coefficient

Value Equity  Guidestone Funds

Very good diversification

The 3 months correlation between Value and Guidestone is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Value Equity Investor and Guidestone Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Funds and Value Equity 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 Value Equity Investor are associated (or correlated) with Guidestone Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Funds has no effect on the direction of Value Equity i.e., Value Equity and Guidestone Funds go up and down completely randomly.

Pair Corralation between Value Equity and Guidestone Funds

Assuming the 90 days horizon Value Equity Investor is expected to under-perform the Guidestone Funds. In addition to that, Value Equity is 6.58 times more volatile than Guidestone Funds . It trades about -0.21 of its total potential returns per unit of risk. Guidestone Funds is currently generating about 0.02 per unit of volatility. If you would invest  964.00  in Guidestone Funds on September 16, 2024 and sell it today you would earn a total of  1.00  from holding Guidestone Funds or generate 0.1% return on investment over 90 days.

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

Value Equity Investor  vs.  Guidestone Funds

Value Equity Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Equity Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Value Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidestone Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidestone Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guidestone Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Value Equity and Guidestone Funds

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

The idea behind Value Equity Investor and Guidestone Funds 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.