Correlation Between Global Bond and Guidestone Growth
Can any of the company-specific risk be diversified away by investing in both Global Bond and Guidestone Growth 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 Global Bond and Guidestone Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Bond Fund and Guidestone Growth Equity, you can compare the effects of market volatilities on Global Bond and Guidestone Growth 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 Global Bond with a short position of Guidestone Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Guidestone Growth.
Diversification Opportunities for Global Bond and Guidestone Growth
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Guidestone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Guidestone Growth Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Growth Equity and Global Bond 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 Global Bond Fund are associated (or correlated) with Guidestone Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Growth Equity has no effect on the direction of Global Bond i.e., Global Bond and Guidestone Growth go up and down completely randomly.
Pair Corralation between Global Bond and Guidestone Growth
Assuming the 90 days horizon Global Bond is expected to generate 8.04 times less return on investment than Guidestone Growth. But when comparing it to its historical volatility, Global Bond Fund is 3.99 times less risky than Guidestone Growth. It trades about 0.05 of its potential returns per unit of risk. Guidestone Growth Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 |
Global Bond Fund vs. Guidestone Growth Equity
Performance |
| Timeline |
| Global Bond Fund |
| Guidestone Growth Equity |
Global Bond and Guidestone Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Guidestone Growth
The main advantage of trading using opposite Global Bond and Guidestone Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Guidestone Growth 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 Growth will offset losses from the drop in Guidestone Growth's long position.| Global Bond vs. Morningstar Municipal Bond | Global Bond vs. Lord Abbett Intermediate | Global Bond vs. Federated Muni And | Global Bond vs. Aig Government Money |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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