Correlation Between Nasdaq-100(r) and Guidepath Growth

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Guidepath Growth 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 Nasdaq-100(r) and Guidepath Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Guidepath Growth And, you can compare the effects of market volatilities on Nasdaq-100(r) and Guidepath Growth 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 Nasdaq-100(r) with a short position of Guidepath Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Guidepath Growth.

Diversification Opportunities for Nasdaq-100(r) and Guidepath Growth

0.66

Correlation Coefficient

Nasdaq-100(r)  Guidepath Growth

Poor diversification

The 3 months correlation between Nasdaq-100(r) and Guidepath is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Guidepath Growth And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Growth And and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Guidepath Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Growth And has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Guidepath Growth go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Guidepath Growth

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Guidepath Growth. In addition to that, Nasdaq-100(r) is 3.62 times more volatile than Guidepath Growth And. It trades about -0.12 of its total potential returns per unit of risk. Guidepath Growth And is currently generating about -0.04 per unit of volatility. If you would invest  1,325  in Guidepath Growth And on December 24, 2024 and sell it today you would lose (25.00) from holding Guidepath Growth And or give up 1.89% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Guidepath Growth And

Nasdaq 100 2x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Guidepath Growth And

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nasdaq-100(r) and Guidepath Growth

The main advantage of trading using opposite Nasdaq-100(r) and Guidepath Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Guidepath Growth 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 Growth will offset losses from the drop in Guidepath Growth's long position.

The idea behind Nasdaq 100 2x Strategy and Guidepath Growth And 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.