Correlation Between Western Asset and Guidestone Value
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Guidestone Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Guidestone Value Equity, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Guidestone Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Guidestone Value.
Diversification Opportunities for Western Asset and Guidestone Value
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Guidestone is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation 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 Western Asset 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 Western Asset Inflation 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 Western Asset i.e., Western Asset and Guidestone Value go up and down completely randomly.
Pair Corralation between Western Asset and Guidestone Value
Assuming the 90 days horizon Western Asset is expected to generate 6.98 times less return on investment than Guidestone Value. But when comparing it to its historical volatility, Western Asset Inflation is 1.86 times less risky than Guidestone Value. It trades about 0.02 of its potential returns per unit of risk. Guidestone Value Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,009 in Guidestone Value Equity on September 3, 2024 and sell it today you would earn a total of 302.00 from holding Guidestone Value Equity or generate 29.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Guidestone Value Equity
Performance |
| Timeline |
| Western Asset Inflation |
| Guidestone Value Equity |
Western Asset and Guidestone Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Guidestone Value
The main advantage of trading using opposite Western Asset and Guidestone Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Blackrock Sm Cap | Western Asset vs. Principal Lifetime Hybrid | Western Asset vs. Adams Diversified Equity | Western Asset vs. Lord Abbett Diversified |
| Guidestone Value vs. Gmo High Yield | Guidestone Value vs. Pgim High Yield | Guidestone Value vs. Gmo High Yield | Guidestone Value vs. Pace High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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