Correlation Between Small Cap and Guidestone Funds
Can any of the company-specific risk be diversified away by investing in both Small Cap and Guidestone 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 Small Cap and Guidestone Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Guidestone Funds International, you can compare the effects of market volatilities on Small Cap and Guidestone 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 Small Cap with a short position of Guidestone Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Guidestone Funds.
Diversification Opportunities for Small Cap and Guidestone Funds
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Small and GuideStone is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Guidestone Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Funds Int and Small Cap 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 Small Cap Equity are associated (or correlated) with Guidestone Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Funds Int has no effect on the direction of Small Cap i.e., Small Cap and Guidestone Funds go up and down completely randomly.
Pair Corralation between Small Cap and Guidestone Funds
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.43 times more return on investment than Guidestone Funds. However, Small Cap is 1.43 times more volatile than Guidestone Funds International. It trades about 0.1 of its potential returns per unit of risk. Guidestone Funds International is currently generating about 0.01 per unit of risk. If you would invest 1,734 in Small Cap Equity on September 3, 2024 and sell it today you would earn a total of 297.00 from holding Small Cap Equity or generate 17.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Guidestone Funds International
Performance |
| Timeline |
| Small Cap Equity |
| Guidestone Funds Int |
Small Cap and Guidestone Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Guidestone Funds
The main advantage of trading using opposite Small Cap and Guidestone Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Guidestone 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 Guidestone Funds will offset losses from the drop in Guidestone Funds' long position.| Small Cap vs. Semiconductor Ultrasector Profund | Small Cap vs. Qs Large Cap | Small Cap vs. Fm Investments Large | Small Cap vs. T Rowe Price |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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