Correlation Between Guidestone Value and Value Equity

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

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

Diversification Opportunities for Guidestone Value and Value Equity

0.59

Correlation Coefficient

Guidestone Value  Value Equity

Very weak diversification

The 3 months correlation between Guidestone and Value is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Value Equity and Value Equity Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Equity Institu and Guidestone Value 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 Guidestone Value Equity are associated (or correlated) with Value Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Equity Institu has no effect on the direction of Guidestone Value i.e., Guidestone Value and Value Equity go up and down completely randomly.

Pair Corralation between Guidestone Value and Value Equity

Assuming the 90 days horizon Guidestone Value Equity is expected to under-perform the Value Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidestone Value Equity is 1.06 times less risky than Value Equity. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Value Equity Institutional is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,945  in Value Equity Institutional on December 5, 2024 and sell it today you would lose (44.00) from holding Value Equity Institutional or give up 2.26% of portfolio value over 90 days.

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

Guidestone Value Equity  vs.  Value Equity Institutional

Guidestone Value Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidestone Value Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Value Equity Institu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Value Equity Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Guidestone Value and Value Equity

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

The idea behind Guidestone Value Equity and Value Equity Institutional 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..