Correlation Between Guardian Capital and Clairvest

Can any of the company-specific risk be diversified away by investing in both Guardian Capital and Clairvest 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 Guardian Capital and Clairvest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardian Capital Group and Clairvest Group, you can compare the effects of market volatilities on Guardian Capital and Clairvest 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 Guardian Capital with a short position of Clairvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Capital and Clairvest.

Diversification Opportunities for Guardian Capital and Clairvest

0.34

Correlation Coefficient

Guardian Capital  Clairvest

Weak diversification

The 3 months correlation between Guardian and Clairvest is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group and Clairvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clairvest Group and Guardian Capital 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 Guardian Capital Group are associated (or correlated) with Clairvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clairvest Group has no effect on the direction of Guardian Capital i.e., Guardian Capital and Clairvest go up and down completely randomly.

Pair Corralation between Guardian Capital and Clairvest

Assuming the 90 days trading horizon Guardian Capital Group is expected to generate 1.42 times more return on investment than Clairvest. However, Guardian Capital is 1.42 times more volatile than Clairvest Group. It trades about 0.0 of its potential returns per unit of risk. Clairvest Group is currently generating about -0.02 per unit of risk. If you would invest  4,100  in Guardian Capital Group on September 24, 2024 and sell it today you would lose (25.00) from holding Guardian Capital Group or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Guardian Capital Group  vs.  Clairvest Group

Guardian Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardian Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Guardian Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Clairvest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clairvest Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Clairvest is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Guardian Capital and Clairvest

The main advantage of trading using opposite Guardian Capital and Clairvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian Capital position performs unexpectedly, Clairvest 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 Clairvest will offset losses from the drop in Clairvest's long position.

The idea behind Guardian Capital Group and Clairvest Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .