Correlation Between Guidemark Large and Huber Capital

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

Diversification Opportunities for Guidemark Large and Huber Capital

-0.5

Correlation Coefficient

Guidemark Large  Huber Capital

Very good diversification

The 3 months correlation between Guidemark and Huber is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Huber Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Small 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 Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Small has no effect on the direction of Guidemark Large i.e., Guidemark Large and Huber Capital go up and down completely randomly.

Pair Corralation between Guidemark Large and Huber Capital

Assuming the 90 days horizon Guidemark Large Cap is expected to generate 0.87 times more return on investment than Huber Capital. However, Guidemark Large Cap is 1.15 times less risky than Huber Capital. It trades about -0.19 of its potential returns per unit of risk. Huber Capital Small is currently generating about -0.26 per unit of risk. If you would invest  1,166  in Guidemark Large Cap on October 1, 2024 and sell it today you would lose (42.00) from holding Guidemark Large Cap or give up 3.6% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  Huber Capital Small

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Huber Capital Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Huber Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guidemark Large and Huber Capital

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

The idea behind Guidemark Large Cap and Huber Capital Small 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.