Correlation Between Guidestone Growth and Strategic Alternatives
Can any of the company-specific risk be diversified away by investing in both Guidestone Growth and Strategic Alternatives 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 Strategic Alternatives 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 Strategic Alternatives Fund, you can compare the effects of market volatilities on Guidestone Growth and Strategic Alternatives 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 Strategic Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Growth and Strategic Alternatives.
Diversification Opportunities for Guidestone Growth and Strategic Alternatives
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guidestone and STRATEGIC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Growth Equity and Strategic Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Alternatives 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 Strategic Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Alternatives has no effect on the direction of Guidestone Growth i.e., Guidestone Growth and Strategic Alternatives go up and down completely randomly.
Pair Corralation between Guidestone Growth and Strategic Alternatives
Assuming the 90 days horizon Guidestone Growth Equity is expected to generate 3.82 times more return on investment than Strategic Alternatives. However, Guidestone Growth is 3.82 times more volatile than Strategic Alternatives Fund. It trades about 0.09 of its potential returns per unit of risk. Strategic Alternatives Fund is currently generating about 0.04 per unit of risk. If you would invest 1,291 in Guidestone Growth Equity on November 9, 2024 and sell it today you would earn a total of 397.00 from holding Guidestone Growth Equity or generate 30.75% 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. Strategic Alternatives Fund
Performance |
| Timeline |
| Guidestone Growth Equity |
| Strategic Alternatives |
Guidestone Growth and Strategic Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Growth and Strategic Alternatives
The main advantage of trading using opposite Guidestone Growth and Strategic Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Growth position performs unexpectedly, Strategic Alternatives 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 Strategic Alternatives will offset losses from the drop in Strategic Alternatives' long position.| Guidestone Growth vs. Absolute Convertible Arbitrage | Guidestone Growth vs. Columbia Vertible Securities | Guidestone Growth vs. Mainstay Vertible Fund | Guidestone Growth vs. Victory Incore Investment |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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