Correlation Between Guidemark Large and Astor Longshort

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Can any of the company-specific risk be diversified away by investing in both Guidemark Large and Astor Longshort 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 Guidemark Large and Astor Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Large Cap and Astor Longshort Fund, you can compare the effects of market volatilities on Guidemark Large and Astor Longshort 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 Guidemark Large with a short position of Astor Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Astor Longshort.

Diversification Opportunities for Guidemark Large and Astor Longshort

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Guidemark and Astor is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Longshort and Guidemark Large 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 Guidemark Large Cap are associated (or correlated) with Astor Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Longshort has no effect on the direction of Guidemark Large i.e., Guidemark Large and Astor Longshort go up and down completely randomly.

Pair Corralation between Guidemark Large and Astor Longshort

Assuming the 90 days horizon Guidemark Large Cap is expected to generate 0.62 times more return on investment than Astor Longshort. However, Guidemark Large Cap is 1.6 times less risky than Astor Longshort. It trades about -0.11 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about -0.09 per unit of risk. If you would invest  1,228  in Guidemark Large Cap on September 28, 2024 and sell it today you would lose (64.00) from holding Guidemark Large Cap or give up 5.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Guidemark Large Cap  vs.  Astor Longshort Fund

 Performance 
       Timeline  
Guidemark Large Cap 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Guidemark Large and Astor Longshort Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guidemark Large and Astor Longshort

The main advantage of trading using opposite Guidemark Large and Astor Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large position performs unexpectedly, Astor Longshort 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 Astor Longshort will offset losses from the drop in Astor Longshort's long position.
The idea behind Guidemark Large Cap and Astor Longshort Fund 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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