Correlation Between Guidestone Value and Commonwealth Global
Can any of the company-specific risk be diversified away by investing in both Guidestone Value and Commonwealth Global 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 Guidestone Value and Commonwealth Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidestone Value Equity and Commonwealth Global Fund, you can compare the effects of market volatilities on Guidestone Value and Commonwealth Global 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 Guidestone Value with a short position of Commonwealth Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Value and Commonwealth Global.
Diversification Opportunities for Guidestone Value and Commonwealth Global
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guidestone and Commonwealth is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Value Equity and Commonwealth Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Global and Guidestone Value 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 Guidestone Value Equity are associated (or correlated) with Commonwealth Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Global has no effect on the direction of Guidestone Value i.e., Guidestone Value and Commonwealth Global go up and down completely randomly.
Pair Corralation between Guidestone Value and Commonwealth Global
Assuming the 90 days horizon Guidestone Value Equity is expected to generate 1.01 times more return on investment than Commonwealth Global. However, Guidestone Value is 1.01 times more volatile than Commonwealth Global Fund. It trades about 0.07 of its potential returns per unit of risk. Commonwealth Global Fund is currently generating about 0.05 per unit of risk. If you would invest 958.00 in Guidestone Value Equity on November 30, 2024 and sell it today you would earn a total of 264.00 from holding Guidestone Value Equity or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidestone Value Equity vs. Commonwealth Global Fund
Performance |
| Timeline |
| Guidestone Value Equity |
| Commonwealth Global |
Guidestone Value and Commonwealth Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Value and Commonwealth Global
The main advantage of trading using opposite Guidestone Value and Commonwealth Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Value position performs unexpectedly, Commonwealth Global 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 Commonwealth Global will offset losses from the drop in Commonwealth Global's long position.| Guidestone Value vs. Commodities Strategy Fund | Guidestone Value vs. Jpmorgan Emerging Markets | Guidestone Value vs. Rbc Emerging Markets | Guidestone Value vs. Transamerica Emerging Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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