Correlation Between Investec Global and Guidepath(r) Managed
Can any of the company-specific risk be diversified away by investing in both Investec Global 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 Investec Global 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 Investec Global Franchise and Guidepath Managed Futures, you can compare the effects of market volatilities on Investec Global 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 Investec Global with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Guidepath(r) Managed.
Diversification Opportunities for Investec Global and Guidepath(r) Managed
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investec and Guidepath(r) is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise 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 Investec Global 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 Investec Global Franchise 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 Investec Global i.e., Investec Global and Guidepath(r) Managed go up and down completely randomly.
Pair Corralation between Investec Global and Guidepath(r) Managed
Assuming the 90 days horizon Investec Global Franchise is expected to generate 0.72 times more return on investment than Guidepath(r) Managed. However, Investec Global Franchise is 1.39 times less risky than Guidepath(r) Managed. It trades about 0.2 of its potential returns per unit of risk. Guidepath Managed Futures is currently generating about -0.06 per unit of risk. If you would invest 1,754 in Investec Global Franchise on November 30, 2024 and sell it today you would earn a total of 82.00 from holding Investec Global Franchise or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Global Franchise vs. Guidepath Managed Futures
Performance |
| Timeline |
| Investec Global Franchise |
| Guidepath Managed Futures |
Investec Global and Guidepath(r) Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Global and Guidepath(r) Managed
The main advantage of trading using opposite Investec Global and Guidepath(r) Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global 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.| Investec Global vs. Investec Emerging Markets | Investec Global vs. Investec Emerging Markets | Investec Global vs. Ninety One Global | Investec Global vs. Investec Global Franchise |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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