Correlation Between Starfleet Innotech and Guardian Capital

Can any of the company-specific risk be diversified away by investing in both Starfleet Innotech and Guardian Capital 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 Starfleet Innotech and Guardian Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Starfleet Innotech and Guardian Capital Group, you can compare the effects of market volatilities on Starfleet Innotech and Guardian Capital 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 Starfleet Innotech with a short position of Guardian Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starfleet Innotech and Guardian Capital.

Diversification Opportunities for Starfleet Innotech and Guardian Capital

-0.12

Correlation Coefficient

Starfleet Innotech  Guardian Capital

Good diversification

The 3 months correlation between Starfleet and Guardian is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Starfleet Innotech and Guardian Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Capital and Starfleet Innotech 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 Starfleet Innotech are associated (or correlated) with Guardian Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Capital has no effect on the direction of Starfleet Innotech i.e., Starfleet Innotech and Guardian Capital go up and down completely randomly.

Pair Corralation between Starfleet Innotech and Guardian Capital

Given the investment horizon of 90 days Starfleet Innotech is expected to generate 6.79 times more return on investment than Guardian Capital. However, Starfleet Innotech is 6.79 times more volatile than Guardian Capital Group. It trades about 0.01 of its potential returns per unit of risk. Guardian Capital Group is currently generating about 0.04 per unit of risk. If you would invest  0.39  in Starfleet Innotech on December 5, 2024 and sell it today you would lose (0.15) from holding Starfleet Innotech or give up 38.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Starfleet Innotech  vs.  Guardian Capital Group

Starfleet Innotech

Risk-Adjusted Performance

Weak

Over the last 90 days Starfleet Innotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady forward indicators, Starfleet Innotech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guardian Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guardian Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Starfleet Innotech and Guardian Capital

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

The idea behind Starfleet Innotech and Guardian Capital Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.