Correlation Between Guardian and PHN Multi

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

By analyzing existing cross correlation between Guardian i3 Global and PHN Multi Style All Cap, you can compare the effects of market volatilities on Guardian and PHN Multi 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 with a short position of PHN Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and PHN Multi.

Diversification Opportunities for Guardian and PHN Multi

0.93

Correlation Coefficient

Guardian  PHN Multi

Almost no diversification

The 3 months correlation between Guardian and PHN is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and PHN Multi Style All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Multi Style and Guardian 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 i3 Global are associated (or correlated) with PHN Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Multi Style has no effect on the direction of Guardian i.e., Guardian and PHN Multi go up and down completely randomly.

Pair Corralation between Guardian and PHN Multi

Assuming the 90 days trading horizon Guardian is expected to generate 1.32 times less return on investment than PHN Multi. In addition to that, Guardian is 1.24 times more volatile than PHN Multi Style All Cap. It trades about 0.17 of its total potential returns per unit of risk. PHN Multi Style All Cap is currently generating about 0.28 per unit of volatility. If you would invest  2,598  in PHN Multi Style All Cap on September 12, 2024 and sell it today you would earn a total of  332.00  from holding PHN Multi Style All Cap or generate 12.78% return on investment over 90 days.

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

Guardian i3 Global  vs.  PHN Multi Style All Cap

Guardian i3 Global

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PHN Multi Style

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardian and PHN Multi

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

The idea behind Guardian i3 Global and PHN Multi Style All Cap 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.