Correlation Between Guidemark(r) Large and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Large and Smallcap World 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 Guidemark(r) Large and Smallcap World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Large Cap and Smallcap World Fund, you can compare the effects of market volatilities on Guidemark(r) Large and Smallcap World 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 Guidemark(r) Large with a short position of Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Large and Smallcap World.
Diversification Opportunities for Guidemark(r) Large and Smallcap World
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guidemark(r) and Smallcap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Guidemark(r) Large 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 Guidemark Large Cap are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Guidemark(r) Large i.e., Guidemark(r) Large and Smallcap World go up and down completely randomly.
Pair Corralation between Guidemark(r) Large and Smallcap World
Assuming the 90 days horizon Guidemark Large Cap is expected to generate 1.17 times more return on investment than Smallcap World. However, Guidemark(r) Large is 1.17 times more volatile than Smallcap World Fund. It trades about -0.03 of its potential returns per unit of risk. Smallcap World Fund is currently generating about -0.06 per unit of risk. If you would invest 3,424 in Guidemark Large Cap on November 6, 2024 and sell it today you would lose (78.00) from holding Guidemark Large Cap or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark Large Cap vs. Smallcap World Fund
Performance |
| Timeline |
| Guidemark Large Cap |
| Smallcap World |
Guidemark(r) Large and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark(r) Large and Smallcap World
The main advantage of trading using opposite Guidemark(r) Large and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark(r) Large position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World's long position.| Guidemark(r) Large vs. Massmutual Premier High | Guidemark(r) Large vs. Artisan High Income | Guidemark(r) Large vs. Ab Bond Inflation | Guidemark(r) Large vs. Ms Global Fixed |
| Smallcap World vs. Fidelity Real Estate | Smallcap World vs. Vy Clarion Real | Smallcap World vs. Neuberger Berman Real | Smallcap World vs. Texton Property |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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