Correlation Between Guidepath(r) Managed and Amer Beacon
Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed and Amer Beacon 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 Guidepath(r) Managed and Amer Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidepath Managed Futures and Amer Beacon Ark, you can compare the effects of market volatilities on Guidepath(r) Managed and Amer Beacon 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 Guidepath(r) Managed with a short position of Amer Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and Amer Beacon.
Diversification Opportunities for Guidepath(r) Managed and Amer Beacon
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guidepath(r) and Amer is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Guidepath(r) Managed 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 Guidepath Managed Futures are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Amer Beacon go up and down completely randomly.
Pair Corralation between Guidepath(r) Managed and Amer Beacon
Assuming the 90 days horizon Guidepath Managed Futures is expected to generate 0.34 times more return on investment than Amer Beacon. However, Guidepath Managed Futures is 2.96 times less risky than Amer Beacon. It trades about -0.06 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about -0.04 per unit of risk. If you would invest 785.00 in Guidepath Managed Futures on November 30, 2024 and sell it today you would lose (17.00) from holding Guidepath Managed Futures or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidepath Managed Futures vs. Amer Beacon Ark
Performance |
| Timeline |
| Guidepath Managed Futures |
| Amer Beacon Ark |
Guidepath(r) Managed and Amer Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidepath(r) Managed and Amer Beacon
The main advantage of trading using opposite Guidepath(r) Managed and Amer Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed position performs unexpectedly, Amer Beacon 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 Amer Beacon will offset losses from the drop in Amer Beacon's long position.The idea behind Guidepath Managed Futures and Amer Beacon Ark pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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