Correlation Between Guardian Capital and Uniteds

Can any of the company-specific risk be diversified away by investing in both Guardian Capital and Uniteds 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 Uniteds 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 Uniteds Limited, you can compare the effects of market volatilities on Guardian Capital and Uniteds 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 Uniteds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Capital and Uniteds.

Diversification Opportunities for Guardian Capital and Uniteds

0.74

Correlation Coefficient

Guardian Capital  Uniteds

Poor diversification

The 3 months correlation between Guardian and Uniteds is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group and Uniteds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniteds Limited 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 Uniteds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniteds Limited has no effect on the direction of Guardian Capital i.e., Guardian Capital and Uniteds go up and down completely randomly.

Pair Corralation between Guardian Capital and Uniteds

Assuming the 90 days trading horizon Guardian Capital Group is expected to generate 1.7 times more return on investment than Uniteds. However, Guardian Capital is 1.7 times more volatile than Uniteds Limited. It trades about 0.12 of its potential returns per unit of risk. Uniteds Limited is currently generating about 0.15 per unit of risk. If you would invest  4,038  in Guardian Capital Group on September 19, 2024 and sell it today you would earn a total of  382.00  from holding Guardian Capital Group or generate 9.46% return on investment over 90 days.

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

Guardian Capital Group  vs.  Uniteds Limited

Guardian Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Guardian Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Uniteds Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uniteds Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Uniteds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardian Capital and Uniteds

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

The idea behind Guardian Capital Group and Uniteds Limited 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.