Correlation Between NYSE Composite and Guidestone Funds

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

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

Diversification Opportunities for NYSE Composite and Guidestone Funds

-0.52

Correlation Coefficient

NYSE Composite  Guidestone Funds

Excellent diversification

The 3 months correlation between NYSE and Guidestone is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Guidestone Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Funds and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Guidestone Funds go up and down completely randomly.

Pair Corralation between NYSE Composite and Guidestone Funds

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.74 times more return on investment than Guidestone Funds. However, NYSE Composite is 1.74 times more volatile than Guidestone Funds . It trades about 0.08 of its potential returns per unit of risk. Guidestone Funds is currently generating about -0.17 per unit of risk. If you would invest  1,922,578  in NYSE Composite on September 17, 2024 and sell it today you would earn a total of  50,359  from holding NYSE Composite or generate 2.62% return on investment over 90 days.

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

NYSE Composite  vs.  Guidestone Funds

Pair Trading with NYSE Composite and Guidestone Funds

The main advantage of trading using opposite NYSE Composite and Guidestone Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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 NYSE Composite 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.