Correlation Between Guidepath(r) Managed and American Funds
Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed and American Funds 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 American Funds 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 American Funds Fundamental, you can compare the effects of market volatilities on Guidepath(r) Managed and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and American Funds.
Diversification Opportunities for Guidepath(r) Managed and American Funds
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guidepath(r) and American is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Funda has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and American Funds go up and down completely randomly.
Pair Corralation between Guidepath(r) Managed and American Funds
Assuming the 90 days horizon Guidepath(r) Managed is expected to generate 2.33 times less return on investment than American Funds. But when comparing it to its historical volatility, Guidepath Managed Futures is 1.27 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds Fundamental is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8,510 in American Funds Fundamental on September 1, 2024 and sell it today you would earn a total of 342.00 from holding American Funds Fundamental or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidepath Managed Futures vs. American Funds Fundamental
Performance |
| Timeline |
| Guidepath Managed Futures |
| American Funds Funda |
Guidepath(r) Managed and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidepath(r) Managed and American Funds
The main advantage of trading using opposite Guidepath(r) Managed and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Guidepath(r) Managed vs. Pimco Income Strategy | Guidepath(r) Managed vs. American Balanced Fund | Guidepath(r) Managed vs. Nuveen Real Asset | Guidepath(r) Managed vs. New Economy Fund |
| American Funds vs. American Funds Inflation | American Funds vs. Lord Abbett Inflation | American Funds vs. Guidepath Managed Futures | American Funds vs. Ab Bond Inflation |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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