Correlation Between Guidestone Funds and Guidestone Value

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

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

Diversification Opportunities for Guidestone Funds and Guidestone Value

-0.69

Correlation Coefficient

Guidestone Funds  Guidestone Value

Excellent diversification

The 3 months correlation between Guidestone and Guidestone is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Funds and Guidestone Value Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Value Equity and Guidestone Funds 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 Guidestone Funds are associated (or correlated) with Guidestone Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Value Equity has no effect on the direction of Guidestone Funds i.e., Guidestone Funds and Guidestone Value go up and down completely randomly.

Pair Corralation between Guidestone Funds and Guidestone Value

Assuming the 90 days horizon Guidestone Funds is expected to under-perform the Guidestone Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidestone Funds is 2.16 times less risky than Guidestone Value. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Guidestone Value Equity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,217  in Guidestone Value Equity on September 2, 2024 and sell it today you would earn a total of  96.00  from holding Guidestone Value Equity or generate 7.89% return on investment over 90 days.

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

Guidestone Funds   vs.  Guidestone Value Equity

Guidestone Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidestone Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guidestone Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidestone Value Equity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidestone Value Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidestone Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guidestone Funds and Guidestone Value

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

The idea behind Guidestone Funds and Guidestone Value Equity 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.