Correlation Between Growth Equity and Guidestone Funds
Can any of the company-specific risk be diversified away by investing in both Growth Equity and Guidestone Funds 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 Equity and Guidestone Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Equity Investor and Guidestone Funds International, you can compare the effects of market volatilities on Growth Equity and Guidestone Funds 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 Equity with a short position of Guidestone Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Equity and Guidestone Funds.
Diversification Opportunities for Growth Equity and Guidestone Funds
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Growth and GuideStone is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Growth Equity Investor and Guidestone Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Funds Int and Growth Equity 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 Equity Investor are associated (or correlated) with Guidestone Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Funds Int has no effect on the direction of Growth Equity i.e., Growth Equity and Guidestone Funds go up and down completely randomly.
Pair Corralation between Growth Equity and Guidestone Funds
Assuming the 90 days horizon Growth Equity Investor is expected to generate 1.35 times more return on investment than Guidestone Funds. However, Growth Equity is 1.35 times more volatile than Guidestone Funds International. It trades about 0.1 of its potential returns per unit of risk. Guidestone Funds International is currently generating about 0.05 per unit of risk. If you would invest 1,821 in Growth Equity Investor on September 3, 2024 and sell it today you would earn a total of 1,162 from holding Growth Equity Investor or generate 63.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Growth Equity Investor vs. Guidestone Funds International
Performance |
Timeline |
Growth Equity Investor |
Guidestone Funds Int |
Growth Equity and Guidestone Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Growth Equity and Guidestone Funds
The main advantage of trading using opposite Growth Equity and Guidestone Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Equity position performs unexpectedly, Guidestone Funds 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 Funds will offset losses from the drop in Guidestone Funds' long position.Growth Equity vs. Short Term Government Fund | Growth Equity vs. Fidelity Series Government | Growth Equity vs. Prudential Government Income | Growth Equity vs. Us Government Securities |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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