Correlation Between Guidestone Growth and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Guidestone Growth and Emerging Markets 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 Guidestone Growth and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidestone Growth Equity and Emerging Markets Equity, you can compare the effects of market volatilities on Guidestone Growth and Emerging Markets 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 Guidestone Growth with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Growth and Emerging Markets.
Diversification Opportunities for Guidestone Growth and Emerging Markets
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guidestone and Emerging is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Growth Equity and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity and Guidestone Growth 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 Guidestone Growth Equity are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Guidestone Growth i.e., Guidestone Growth and Emerging Markets go up and down completely randomly.
Pair Corralation between Guidestone Growth and Emerging Markets
Assuming the 90 days horizon Guidestone Growth Equity is expected to generate 1.13 times more return on investment than Emerging Markets. However, Guidestone Growth is 1.13 times more volatile than Emerging Markets Equity. It trades about 0.11 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.02 per unit of risk. If you would invest 1,423 in Guidestone Growth Equity on September 3, 2024 and sell it today you would earn a total of 251.00 from holding Guidestone Growth Equity or generate 17.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidestone Growth Equity vs. Emerging Markets Equity
Performance |
| Timeline |
| Guidestone Growth Equity |
| Emerging Markets Equity |
Guidestone Growth and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Growth and Emerging Markets
The main advantage of trading using opposite Guidestone Growth and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Growth position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Guidestone Growth vs. Touchstone Large Cap | Guidestone Growth vs. Vela Large Cap | Guidestone Growth vs. Siit Large Cap | Guidestone Growth vs. Qs Large Cap |
| Emerging Markets vs. Emerging Markets Fund | Emerging Markets vs. Emerging Markets Fund | Emerging Markets vs. Emerging Markets Fund | Emerging Markets vs. Emerging Markets Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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