Correlation Between American Funds and Guidestone Value
Can any of the company-specific risk be diversified away by investing in both American Funds and Guidestone Value 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 American Funds and Guidestone Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Guidestone Value Equity, you can compare the effects of market volatilities on American Funds and Guidestone Value 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 American Funds with a short position of Guidestone Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Guidestone Value.
Diversification Opportunities for American Funds and Guidestone Value
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Guidestone is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Guidestone Value Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Value Equity and American Funds 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 American Funds American are associated (or correlated) with Guidestone Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Value Equity has no effect on the direction of American Funds i.e., American Funds and Guidestone Value go up and down completely randomly.
Pair Corralation between American Funds and Guidestone Value
Assuming the 90 days horizon American Funds is expected to generate 1.08 times less return on investment than Guidestone Value. But when comparing it to its historical volatility, American Funds American is 1.25 times less risky than Guidestone Value. It trades about 0.09 of its potential returns per unit of risk. Guidestone Value Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,003 in Guidestone Value Equity on September 3, 2024 and sell it today you would earn a total of 307.00 from holding Guidestone Value Equity or generate 30.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Guidestone Value Equity
Performance |
| Timeline |
| American Funds American |
| Guidestone Value Equity |
American Funds and Guidestone Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Guidestone Value
The main advantage of trading using opposite American Funds and Guidestone Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Guidestone Value 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 Guidestone Value will offset losses from the drop in Guidestone Value's long position.| American Funds vs. Vanguard Explorer Fund | American Funds vs. Vanguard Primecap Fund | American Funds vs. Vanguard Wellington Fund | American Funds vs. Vanguard Windsor Ii |
| Guidestone Value vs. Vanguard Value Index | Guidestone Value vs. Dodge Cox Stock | Guidestone Value vs. American Funds American | Guidestone Value vs. American Funds American |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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