Correlation Between Guidestone Funds and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Guidestone Funds and Growth Allocation 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 Guidestone Funds and Growth Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidestone Funds and Growth Allocation Fund, you can compare the effects of market volatilities on Guidestone Funds and Growth Allocation 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 Guidestone Funds with a short position of Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Funds and Growth Allocation.
Diversification Opportunities for Guidestone Funds and Growth Allocation
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guidestone and Growth is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Funds and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation and Guidestone Funds 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 Guidestone Funds are associated (or correlated) with Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Guidestone Funds i.e., Guidestone Funds and Growth Allocation go up and down completely randomly.
Pair Corralation between Guidestone Funds and Growth Allocation
Assuming the 90 days horizon Guidestone Funds is expected to generate 2.64 times less return on investment than Growth Allocation. But when comparing it to its historical volatility, Guidestone Funds is 1.79 times less risky than Growth Allocation. It trades about 0.07 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,235 in Growth Allocation Fund on August 28, 2024 and sell it today you would earn a total of 103.00 from holding Growth Allocation Fund or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidestone Funds vs. Growth Allocation Fund
Performance |
| Timeline |
| Guidestone Funds |
| Growth Allocation |
Guidestone Funds and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Funds and Growth Allocation
The main advantage of trading using opposite Guidestone Funds and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Funds position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation's long position.| Guidestone Funds vs. Growth Allocation Fund | Guidestone Funds vs. Defensive Market Strategies | Guidestone Funds vs. Defensive Market Strategies | Guidestone Funds vs. Value Equity Institutional |
| Growth Allocation vs. Auer Growth Fund | Growth Allocation vs. Materials Portfolio Fidelity | Growth Allocation vs. Ab Value Fund | Growth Allocation vs. Ab E Opportunities |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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