Correlation Between Guild Holdings and Federal Home
Can any of the company-specific risk be diversified away by investing in both Guild Holdings and Federal Home 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 Guild Holdings and Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guild Holdings Co and Federal Home Loan, you can compare the effects of market volatilities on Guild Holdings and Federal Home 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 Guild Holdings with a short position of Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Holdings and Federal Home.
Diversification Opportunities for Guild Holdings and Federal Home
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guild and Federal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guild Holdings Co and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and Guild Holdings 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 Guild Holdings Co are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Guild Holdings i.e., Guild Holdings and Federal Home go up and down completely randomly.
Pair Corralation between Guild Holdings and Federal Home
Given the investment horizon of 90 days Guild Holdings Co is expected to under-perform the Federal Home. But the stock apears to be less risky and, when comparing its historical volatility, Guild Holdings Co is 5.93 times less risky than Federal Home. The stock trades about -0.17 of its potential returns per unit of risk. The Federal Home Loan is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 144.00 in Federal Home Loan on August 24, 2024 and sell it today you would earn a total of 164.00 from holding Federal Home Loan or generate 113.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guild Holdings Co vs. Federal Home Loan
Performance |
| Timeline |
| Guild Holdings |
| Federal Home Loan |
Guild Holdings and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guild Holdings and Federal Home
The main advantage of trading using opposite Guild Holdings and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guild Holdings position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Guild Holdings vs. Mr Cooper Group | Guild Holdings vs. Encore Capital Group | Guild Holdings vs. CNFinance Holdings | Guild Holdings vs. Security National Financial |
| Federal Home vs. Encore Capital Group | Federal Home vs. Greystone Housing Impact | Federal Home vs. Guild Holdings Co | Federal Home vs. Security National Financial |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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