Correlation Between International Equity and Guidestone Growth
Can any of the company-specific risk be diversified away by investing in both International Equity 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 International Equity and Guidestone Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Investor and Guidestone Growth Equity, you can compare the effects of market volatilities on International Equity 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 International Equity with a short position of Guidestone Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Guidestone Growth.
Diversification Opportunities for International Equity and Guidestone Growth
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Guidestone is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Investor 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 International 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 International Equity Investor 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 International Equity i.e., International Equity and Guidestone Growth go up and down completely randomly.
Pair Corralation between International Equity and Guidestone Growth
Assuming the 90 days horizon International Equity is expected to generate 6.16 times less return on investment than Guidestone Growth. But when comparing it to its historical volatility, International Equity Investor is 1.34 times less risky than Guidestone Growth. It trades about 0.02 of its potential returns per unit of risk. Guidestone Growth Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,424 in Guidestone Growth Equity on September 3, 2024 and sell it today you would earn a total of 249.00 from holding Guidestone Growth Equity or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Equity Investor vs. Guidestone Growth Equity
Performance |
| Timeline |
| International Equity |
| Guidestone Growth Equity |
International Equity and Guidestone Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Guidestone Growth
The main advantage of trading using opposite International Equity and Guidestone Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity 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.| International Equity vs. Financials Ultrasector Profund | International Equity vs. Goldman Sachs Financial | International Equity vs. 1919 Financial Services | International Equity vs. Icon Financial Fund |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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