Correlation Between Guidestone Funds and International Equity
Can any of the company-specific risk be diversified away by investing in both Guidestone Funds and International Equity 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 International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidestone Funds Impact and International Equity Investor, you can compare the effects of market volatilities on Guidestone Funds and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Funds and International Equity.
Diversification Opportunities for Guidestone Funds and International Equity
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guidestone and International is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Funds Impact and International Equity Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 Impact are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Guidestone Funds i.e., Guidestone Funds and International Equity go up and down completely randomly.
Pair Corralation between Guidestone Funds and International Equity
Assuming the 90 days horizon Guidestone Funds is expected to generate 1.38 times less return on investment than International Equity. In addition to that, Guidestone Funds is 1.07 times more volatile than International Equity Investor. It trades about 0.21 of its total potential returns per unit of risk. International Equity Investor is currently generating about 0.31 per unit of volatility. If you would invest 1,381 in International Equity Investor on November 9, 2024 and sell it today you would earn a total of 73.00 from holding International Equity Investor or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidestone Funds Impact vs. International Equity Investor
Performance |
| Timeline |
| Guidestone Funds Impact |
| International Equity |
Guidestone Funds and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Funds and International Equity
The main advantage of trading using opposite Guidestone Funds and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Funds position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Guidestone Funds vs. Transamerica International Small | Guidestone Funds vs. Franklin Small Cap | Guidestone Funds vs. Glg Intl Small | Guidestone Funds vs. Rational Defensive Growth |
| International Equity vs. T Rowe Price | International Equity vs. Growth Fund Of | International Equity vs. Gmo Quality Fund | International Equity vs. Rbb Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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