Correlation Between Guardian and Dynamic Active
Can any of the company-specific risk be diversified away by investing in both Guardian and Dynamic Active 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 Guardian and Dynamic Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardian i3 Global and Dynamic Active Global, you can compare the effects of market volatilities on Guardian and Dynamic Active 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 Guardian with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and Dynamic Active.
Diversification Opportunities for Guardian and Dynamic Active
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guardian and Dynamic is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and Dynamic Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Global and Guardian 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 Guardian i3 Global are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Global has no effect on the direction of Guardian i.e., Guardian and Dynamic Active go up and down completely randomly.
Pair Corralation between Guardian and Dynamic Active
Assuming the 90 days trading horizon Guardian i3 Global is expected to generate 0.96 times more return on investment than Dynamic Active. However, Guardian i3 Global is 1.04 times less risky than Dynamic Active. It trades about 0.12 of its potential returns per unit of risk. Dynamic Active Global is currently generating about 0.1 per unit of risk. If you would invest 1,846 in Guardian i3 Global on September 1, 2024 and sell it today you would earn a total of 1,139 from holding Guardian i3 Global or generate 61.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guardian i3 Global vs. Dynamic Active Global
Performance |
| Timeline |
| Guardian i3 Global |
| Dynamic Active Global |
Guardian and Dynamic Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardian and Dynamic Active
The main advantage of trading using opposite Guardian and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.| Guardian vs. Guardian i3 Quality | Guardian vs. Guardian Directed Premium | Guardian vs. Guardian Directed Equity | Guardian vs. CI ONE Global |
| Dynamic Active vs. Brompton Global Dividend | Dynamic Active vs. Brompton European Dividend | Dynamic Active vs. Brompton North American | Dynamic Active vs. Global Healthcare Income |
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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