Correlation Between Guidestone Value and Defensive Market
Can any of the company-specific risk be diversified away by investing in both Guidestone Value and Defensive Market 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 Defensive Market 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 Defensive Market Strategies, you can compare the effects of market volatilities on Guidestone Value and Defensive Market 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 Defensive Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Value and Defensive Market.
Diversification Opportunities for Guidestone Value and Defensive Market
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guidestone and Defensive is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Value Equity and Defensive Market Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defensive Market Str 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 Defensive Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defensive Market Str has no effect on the direction of Guidestone Value i.e., Guidestone Value and Defensive Market go up and down completely randomly.
Pair Corralation between Guidestone Value and Defensive Market
Assuming the 90 days horizon Guidestone Value Equity is expected to generate 1.69 times more return on investment than Defensive Market. However, Guidestone Value is 1.69 times more volatile than Defensive Market Strategies. It trades about 0.31 of its potential returns per unit of risk. Defensive Market Strategies is currently generating about 0.25 per unit of risk. If you would invest 1,242 in Guidestone Value Equity on August 31, 2024 and sell it today you would earn a total of 71.00 from holding Guidestone Value Equity or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidestone Value Equity vs. Defensive Market Strategies
Performance |
| Timeline |
| Guidestone Value Equity |
| Defensive Market Str |
Guidestone Value and Defensive Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidestone Value and Defensive Market
The main advantage of trading using opposite Guidestone Value and Defensive Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Value position performs unexpectedly, Defensive Market 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 Defensive Market will offset losses from the drop in Defensive Market's long position.| Guidestone Value vs. Ab Bond Inflation | Guidestone Value vs. Arrow Managed Futures | Guidestone Value vs. Aqr Managed Futures | Guidestone Value vs. Western Asset Inflation |
| Defensive Market vs. Fpa Queens Road | Defensive Market vs. Amg River Road | Defensive Market vs. American Century Etf | Defensive Market vs. Lord Abbett Small |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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