Correlation Between Guidepath(r) Managed and Short Duration
Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed and Short Duration 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 Short Duration 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 Short Duration Bond, you can compare the effects of market volatilities on Guidepath(r) Managed and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and Short Duration.
Diversification Opportunities for Guidepath(r) Managed and Short Duration
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guidepath(r) and Short is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Short Duration Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Bond 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Bond has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Short Duration go up and down completely randomly.
Pair Corralation between Guidepath(r) Managed and Short Duration
Assuming the 90 days horizon Guidepath Managed Futures is expected to generate 5.72 times more return on investment than Short Duration. However, Guidepath(r) Managed is 5.72 times more volatile than Short Duration Bond. It trades about 0.14 of its potential returns per unit of risk. Short Duration Bond is currently generating about 0.19 per unit of risk. If you would invest 768.00 in Guidepath Managed Futures on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Guidepath Managed Futures or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Guidepath Managed Futures vs. Short Duration Bond
Performance |
| Timeline |
| Guidepath Managed Futures |
| Short Duration Bond |
Guidepath(r) Managed and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidepath(r) Managed and Short Duration
The main advantage of trading using opposite Guidepath(r) Managed and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's 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 |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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