Correlation Between Guidemark Large and High Yield

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

Diversification Opportunities for Guidemark Large and High Yield

0.52

Correlation Coefficient

Guidemark Large  High Yield

Very weak diversification

The 3 months correlation between Guidemark and High is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Guidemark Large i.e., Guidemark Large and High Yield go up and down completely randomly.

Pair Corralation between Guidemark Large and High Yield

Assuming the 90 days horizon Guidemark Large Cap is expected to generate 5.94 times more return on investment than High Yield. However, Guidemark Large is 5.94 times more volatile than High Yield Fund. It trades about 0.05 of its potential returns per unit of risk. High Yield Fund is currently generating about -0.02 per unit of risk. If you would invest  1,151  in Guidemark Large Cap on September 14, 2024 and sell it today you would earn a total of  32.00  from holding Guidemark Large Cap or generate 2.78% return on investment over 90 days.

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

Guidemark Large Cap  vs.  High Yield Fund

Guidemark Large Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

High Yield Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Yield Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, High Yield 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 High Yield

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

The idea behind Guidemark Large Cap and High Yield 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.