Correlation Between Vy T and Guidemark(r) Small/mid

Can any of the company-specific risk be diversified away by investing in both Vy T and Guidemark(r) Small/mid 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 Vy T and Guidemark(r) Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vy T Rowe and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Vy T and Guidemark(r) Small/mid 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 Vy T with a short position of Guidemark(r) Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vy T and Guidemark(r) Small/mid.

Diversification Opportunities for Vy T and Guidemark(r) Small/mid

0.55

Correlation Coefficient

Vy T  Guidemark(r) Small/mid

Very weak diversification

The 3 months correlation between IAXTX and Guidemark(r) is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vy T Rowe and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap and Vy T 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 Vy T Rowe are associated (or correlated) with Guidemark(r) Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Vy T i.e., Vy T and Guidemark(r) Small/mid go up and down completely randomly.

Pair Corralation between Vy T and Guidemark(r) Small/mid

Assuming the 90 days horizon Vy T Rowe is expected to generate 0.72 times more return on investment than Guidemark(r) Small/mid. However, Vy T Rowe is 1.39 times less risky than Guidemark(r) Small/mid. It trades about 0.14 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about -0.02 per unit of risk. If you would invest  832.00  in Vy T Rowe on October 23, 2024 and sell it today you would earn a total of  83.00  from holding Vy T Rowe or generate 9.98% return on investment over 90 days.

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

Vy T Rowe  vs.  Guidemark Smallmid Cap

Vy T Rowe

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy T Rowe are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vy T may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guidemark Smallmid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Guidemark(r) Small/mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vy T and Guidemark(r) Small/mid

The main advantage of trading using opposite Vy T and Guidemark(r) Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy T position performs unexpectedly, Guidemark(r) Small/mid 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 Guidemark(r) Small/mid will offset losses from the drop in Guidemark(r) Small/mid's long position.

The idea behind Vy T Rowe and Guidemark Smallmid Cap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.