Correlation Between Inflation-protected and Guidepath(r) Managed
Can any of the company-specific risk be diversified away by investing in both Inflation-protected and Guidepath(r) Managed 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 Inflation-protected and Guidepath(r) Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Guidepath Managed Futures, you can compare the effects of market volatilities on Inflation-protected and Guidepath(r) Managed 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 Inflation-protected with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Guidepath(r) Managed.
Diversification Opportunities for Inflation-protected and Guidepath(r) Managed
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Inflation-protected and Guidepath(r) is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and Inflation-protected 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 Inflation Protected Bond Fund are associated (or correlated) with Guidepath(r) Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Inflation-protected i.e., Inflation-protected and Guidepath(r) Managed go up and down completely randomly.
Pair Corralation between Inflation-protected and Guidepath(r) Managed
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 0.61 times more return on investment than Guidepath(r) Managed. However, Inflation Protected Bond Fund is 1.63 times less risky than Guidepath(r) Managed. It trades about 0.13 of its potential returns per unit of risk. Guidepath Managed Futures is currently generating about -0.12 per unit of risk. If you would invest 959.00 in Inflation Protected Bond Fund on September 3, 2024 and sell it today you would earn a total of 75.00 from holding Inflation Protected Bond Fund or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Guidepath Managed Futures
Performance |
| Timeline |
| Inflation Protected |
| Guidepath Managed Futures |
Inflation-protected and Guidepath(r) Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-protected and Guidepath(r) Managed
The main advantage of trading using opposite Inflation-protected and Guidepath(r) Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected position performs unexpectedly, Guidepath(r) Managed 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 Guidepath(r) Managed will offset losses from the drop in Guidepath(r) Managed's long position.| Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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