Correlation Between Growth Allocation and Guidestone Value
Can any of the company-specific risk be diversified away by investing in both Growth Allocation 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 Growth Allocation and Guidestone Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Allocation Fund and Guidestone Value Equity, you can compare the effects of market volatilities on Growth Allocation 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 Growth Allocation with a short position of Guidestone Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Allocation and Guidestone Value.
Diversification Opportunities for Growth Allocation and Guidestone Value
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Guidestone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Fund 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 Growth Allocation 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 Growth Allocation Fund 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 Growth Allocation i.e., Growth Allocation and Guidestone Value go up and down completely randomly.
Pair Corralation between Growth Allocation and Guidestone Value
Assuming the 90 days horizon Growth Allocation is expected to generate 1.28 times less return on investment than Guidestone Value. But when comparing it to its historical volatility, Growth Allocation Fund is 1.17 times less risky than Guidestone Value. It trades about 0.27 of its potential returns per unit of risk. Guidestone Value Equity is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,172 in Guidestone Value Equity on November 8, 2024 and sell it today you would earn a total of 51.00 from holding Guidestone Value Equity or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Allocation Fund vs. Guidestone Value Equity
Performance |
| Timeline |
| Growth Allocation |
| Guidestone Value Equity |
Growth Allocation and Guidestone Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Allocation and Guidestone Value
The main advantage of trading using opposite Growth Allocation and Guidestone Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation 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.| Growth Allocation vs. Fidelity Advisor Energy | Growth Allocation vs. Ivy Natural Resources | Growth Allocation vs. Clearbridge Energy Mlp | Growth Allocation vs. Short Oil Gas |
| Guidestone Value vs. Tfa Alphagen Growth | Guidestone Value vs. Upright Growth Income | Guidestone Value vs. L Abbett Growth | Guidestone Value vs. Qs Defensive Growth |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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