Correlation Between Guidemark Large and Extended Market
Can any of the company-specific risk be diversified away by investing in both Guidemark Large and Extended Market 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 Large and Extended Market 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 Extended Market Index, you can compare the effects of market volatilities on Guidemark Large and Extended Market 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 Large with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Extended Market.
Diversification Opportunities for Guidemark Large and Extended Market
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guidemark and Extended is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Guidemark 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Guidemark Large i.e., Guidemark Large and Extended Market go up and down completely randomly.
Pair Corralation between Guidemark Large and Extended Market
Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Extended Market. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidemark Large Cap is 1.24 times less risky than Extended Market. The mutual fund trades about -0.26 of its potential returns per unit of risk. The Extended Market Index is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,136 in Extended Market Index on October 18, 2024 and sell it today you would lose (47.00) from holding Extended Market Index or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark Large Cap vs. Extended Market Index
Performance |
| Timeline |
| Guidemark Large Cap |
| Extended Market Index |
Guidemark Large and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark Large and Extended Market
The main advantage of trading using opposite Guidemark Large and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Guidemark Large vs. Franklin Lifesmart Retirement | Guidemark Large vs. Moderate Balanced Allocation | Guidemark Large vs. Putnam Retirement Advantage | Guidemark Large vs. Voya Target Retirement |
| Extended Market vs. Clearbridge Energy Mlp | Extended Market vs. Pimco Energy Tactical | Extended Market vs. World Energy Fund | Extended Market vs. Invesco Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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