Correlation Between Applied Finance and Guidepath(r) Managed
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Guidepath(r) Managed 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 Applied Finance and Guidepath(r) Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Guidepath Managed Futures, you can compare the effects of market volatilities on Applied Finance and Guidepath(r) Managed 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 Applied Finance with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Guidepath(r) Managed.
Diversification Opportunities for Applied Finance and Guidepath(r) Managed
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and Guidepath(r) is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Guidepath(r) Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Applied Finance i.e., Applied Finance and Guidepath(r) Managed go up and down completely randomly.
Pair Corralation between Applied Finance and Guidepath(r) Managed
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.44 times more return on investment than Guidepath(r) Managed. However, Applied Finance is 1.44 times more volatile than Guidepath Managed Futures. It trades about 0.27 of its potential returns per unit of risk. Guidepath Managed Futures is currently generating about 0.03 per unit of risk. If you would invest 2,169 in Applied Finance Explorer on November 3, 2024 and sell it today you would earn a total of 114.00 from holding Applied Finance Explorer or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Guidepath Managed Futures
Performance |
| Timeline |
| Applied Finance Explorer |
| Guidepath Managed Futures |
Applied Finance and Guidepath(r) Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Guidepath(r) Managed
The main advantage of trading using opposite Applied Finance and Guidepath(r) Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Guidepath(r) Managed 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(r) Managed will offset losses from the drop in Guidepath(r) Managed's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Guidepath(r) Managed vs. Growth Strategy Fund | Guidepath(r) Managed vs. Franklin Emerging Market | Guidepath(r) Managed vs. Angel Oak Multi Strategy | Guidepath(r) Managed vs. Artisan Developing World |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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