Correlation Between Small Company and Guidestone Value
Can any of the company-specific risk be diversified away by investing in both Small Company and Guidestone Value 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 Company and Guidestone Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Guidestone Value Equity, you can compare the effects of market volatilities on Small Company and Guidestone Value 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 Company with a short position of Guidestone Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Guidestone Value.
Diversification Opportunities for Small Company and Guidestone Value
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Guidestone is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Guidestone Value Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Value Equity and Small Company 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 Pany Growth are associated (or correlated) with Guidestone Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Value Equity has no effect on the direction of Small Company i.e., Small Company and Guidestone Value go up and down completely randomly.
Pair Corralation between Small Company and Guidestone Value
Assuming the 90 days horizon Small Pany Growth is expected to generate 3.0 times more return on investment than Guidestone Value. However, Small Company is 3.0 times more volatile than Guidestone Value Equity. It trades about 0.09 of its potential returns per unit of risk. Guidestone Value Equity is currently generating about 0.14 per unit of risk. If you would invest 1,111 in Small Pany Growth on September 4, 2024 and sell it today you would earn a total of 558.00 from holding Small Pany Growth or generate 50.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Guidestone Value Equity
Performance |
| Timeline |
| Small Pany Growth |
| Guidestone Value Equity |
Small Company and Guidestone Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Guidestone Value
The main advantage of trading using opposite Small Company and Guidestone Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Guidestone Value 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 Value will offset losses from the drop in Guidestone Value's long position.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Guidestone Value vs. Nationwide Growth Fund | Guidestone Value vs. William Blair Growth | Guidestone Value vs. Pace Smallmedium Growth | Guidestone Value vs. Small Pany Growth |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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