Correlation Between Metropolitan West and Guidemark(r) Large

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

By analyzing existing cross correlation between Metropolitan West Alpha and Guidemark Large Cap, you can compare the effects of market volatilities on Metropolitan West and Guidemark(r) Large 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 Metropolitan West with a short position of Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Guidemark(r) Large.

Diversification Opportunities for Metropolitan West and Guidemark(r) Large

0.11

Correlation Coefficient

Metropolitan West  Guidemark(r) Large

Average diversification

The 3 months correlation between Metropolitan and Guidemark(r) is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Alpha and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap and Metropolitan West 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 Metropolitan West Alpha are associated (or correlated) with Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Metropolitan West i.e., Metropolitan West and Guidemark(r) Large go up and down completely randomly.

Pair Corralation between Metropolitan West and Guidemark(r) Large

Assuming the 90 days horizon Metropolitan West Alpha is expected to generate 0.88 times more return on investment than Guidemark(r) Large. However, Metropolitan West Alpha is 1.14 times less risky than Guidemark(r) Large. It trades about 0.11 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about 0.08 per unit of risk. If you would invest  798.00  in Metropolitan West Alpha on October 23, 2024 and sell it today you would earn a total of  381.00  from holding Metropolitan West Alpha or generate 47.74% return on investment over 90 days.

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

Metropolitan West Alpha  vs.  Guidemark Large Cap

Metropolitan West Alpha

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guidemark Large Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidemark(r) Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metropolitan West and Guidemark(r) Large

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

The idea behind Metropolitan West Alpha and Guidemark Large 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.