Correlation Between Waterstone Financial and Guild Holdings

Can any of the company-specific risk be diversified away by investing in both Waterstone Financial and Guild Holdings 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 Waterstone Financial and Guild Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Waterstone Financial and Guild Holdings Co, you can compare the effects of market volatilities on Waterstone Financial and Guild Holdings 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 Waterstone Financial with a short position of Guild Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Guild Holdings.

Diversification Opportunities for Waterstone Financial and Guild Holdings

-0.23

Correlation Coefficient

Waterstone Financial  Guild Holdings

Very good diversification

The 3 months correlation between Waterstone and Guild is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings and Waterstone Financial 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 Waterstone Financial are associated (or correlated) with Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Waterstone Financial i.e., Waterstone Financial and Guild Holdings go up and down completely randomly.

Pair Corralation between Waterstone Financial and Guild Holdings

Given the investment horizon of 90 days Waterstone Financial is expected to generate 1.13 times more return on investment than Guild Holdings. However, Waterstone Financial is 1.13 times more volatile than Guild Holdings Co. It trades about -0.08 of its potential returns per unit of risk. Guild Holdings Co is currently generating about -0.15 per unit of risk. If you would invest  1,518  in Waterstone Financial on September 21, 2024 and sell it today you would lose (170.00) from holding Waterstone Financial or give up 11.2% of portfolio value over 90 days.

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

Waterstone Financial  vs.  Guild Holdings Co

Waterstone Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waterstone Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Waterstone Financial and Guild Holdings

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

The idea behind Waterstone Financial and Guild Holdings Co 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.