Correlation Between Balanced Strategy and Guidepath Income

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

By analyzing existing cross correlation between Balanced Strategy Fund and Guidepath Income, you can compare the effects of market volatilities on Balanced Strategy and Guidepath Income 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 Balanced Strategy with a short position of Guidepath Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Guidepath Income.

Diversification Opportunities for Balanced Strategy and Guidepath Income

0.37

Correlation Coefficient

Balanced Strategy  Guidepath Income

Weak diversification

The 3 months correlation between Balanced and Guidepath is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Guidepath Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Income and Balanced Strategy 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 Balanced Strategy Fund are associated (or correlated) with Guidepath Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Income has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Guidepath Income go up and down completely randomly.

Pair Corralation between Balanced Strategy and Guidepath Income

Assuming the 90 days horizon Balanced Strategy is expected to generate 7.04 times less return on investment than Guidepath Income. In addition to that, Balanced Strategy is 2.16 times more volatile than Guidepath Income. It trades about 0.01 of its total potential returns per unit of risk. Guidepath Income is currently generating about 0.13 per unit of volatility. If you would invest  842.00  in Guidepath Income on December 22, 2024 and sell it today you would earn a total of  17.00  from holding Guidepath Income or generate 2.02% return on investment over 90 days.

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

Balanced Strategy Fund  vs.  Guidepath Income

Balanced Strategy

Risk-Adjusted Performance

Very Weak

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

Guidepath Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guidepath Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Strategy and Guidepath Income

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

The idea behind Balanced Strategy Fund and Guidepath Income 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.