Correlation Between Guild Holdings and Timbercreek Financial

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

By analyzing existing cross correlation between Guild Holdings Co and Timbercreek Financial Corp, you can compare the effects of market volatilities on Guild Holdings and Timbercreek Financial 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 Guild Holdings with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Holdings and Timbercreek Financial.

Diversification Opportunities for Guild Holdings and Timbercreek Financial

0.56

Correlation Coefficient

Guild Holdings  Timbercreek Financial

Very weak diversification

The 3 months correlation between Guild and Timbercreek is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guild Holdings Co and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and Guild Holdings 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 Guild Holdings Co are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Guild Holdings i.e., Guild Holdings and Timbercreek Financial go up and down completely randomly.

Pair Corralation between Guild Holdings and Timbercreek Financial

Given the investment horizon of 90 days Guild Holdings Co is expected to under-perform the Timbercreek Financial. But the stock apears to be less risky and, when comparing its historical volatility, Guild Holdings Co is 1.46 times less risky than Timbercreek Financial. The stock trades about -0.15 of its potential returns per unit of risk. The Timbercreek Financial Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  567.00  in Timbercreek Financial Corp on August 31, 2024 and sell it today you would lose (16.00) from holding Timbercreek Financial Corp or give up 2.82% of portfolio value over 90 days.

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

Guild Holdings Co  vs.  Timbercreek Financial Corp

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Timbercreek Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Timbercreek Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guild Holdings and Timbercreek Financial

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

The idea behind Guild Holdings Co and Timbercreek Financial Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..