Correlation Between Guidestone Growth and Aggressive Allocation
Can any of the company-specific risk be diversified away by investing in both Guidestone Growth and Aggressive Allocation 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 Aggressive Allocation 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 Aggressive Allocation Fund, you can compare the effects of market volatilities on Guidestone Growth and Aggressive Allocation 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 Aggressive Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Growth and Aggressive Allocation.
Diversification Opportunities for Guidestone Growth and Aggressive Allocation
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guidestone and Aggressive is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Growth Equity and Aggressive Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Allocation 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 Aggressive Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Allocation has no effect on the direction of Guidestone Growth i.e., Guidestone Growth and Aggressive Allocation go up and down completely randomly.
Pair Corralation between Guidestone Growth and Aggressive Allocation
Assuming the 90 days horizon Guidestone Growth Equity is expected to generate 1.53 times more return on investment than Aggressive Allocation. However, Guidestone Growth is 1.53 times more volatile than Aggressive Allocation Fund. It trades about 0.09 of its potential returns per unit of risk. Aggressive Allocation Fund is currently generating about 0.09 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidestone Growth Equity vs. Aggressive Allocation Fund
Performance |
| Timeline |
| Guidestone Growth Equity |
| Aggressive Allocation |
Guidestone Growth and Aggressive Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Growth and Aggressive Allocation
The main advantage of trading using opposite Guidestone Growth and Aggressive Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Growth position performs unexpectedly, Aggressive Allocation 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 Aggressive Allocation will offset losses from the drop in Aggressive Allocation's 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 |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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