Correlation Between Real Estate and Guidemark(r) Small/mid

Can any of the company-specific risk be diversified away by investing in both Real Estate 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 Real Estate 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 Real Estate Ultrasector and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Real Estate 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 Real Estate with a short position of Guidemark(r) Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Guidemark(r) Small/mid.

Diversification Opportunities for Real Estate and Guidemark(r) Small/mid

0.29

Correlation Coefficient

Real Estate  Guidemark(r) Small/mid

Modest diversification

The 3 months correlation between Real and Guidemark(r) is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Ultrasector 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 Real Estate 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 Real Estate Ultrasector 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 Real Estate i.e., Real Estate and Guidemark(r) Small/mid go up and down completely randomly.

Pair Corralation between Real Estate and Guidemark(r) Small/mid

Assuming the 90 days horizon Real Estate is expected to generate 2.53 times less return on investment than Guidemark(r) Small/mid. In addition to that, Real Estate is 1.39 times more volatile than Guidemark Smallmid Cap. It trades about 0.01 of its total potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.03 per unit of volatility. If you would invest  1,735  in Guidemark Smallmid Cap on October 4, 2024 and sell it today you would earn a total of  218.00  from holding Guidemark Smallmid Cap or generate 12.56% return on investment over 90 days.

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

Real Estate Ultrasector  vs.  Guidemark Smallmid Cap

Real Estate Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Real Estate and Guidemark(r) Small/mid

The main advantage of trading using opposite Real Estate and Guidemark(r) Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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 Real Estate Ultrasector 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.