Correlation Between Guidepath Managed and Ultra Fund

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

By analyzing existing cross correlation between Guidepath Managed Futures and Ultra Fund A, you can compare the effects of market volatilities on Guidepath Managed and Ultra Fund 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 Guidepath Managed with a short position of Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Managed and Ultra Fund.

Diversification Opportunities for Guidepath Managed and Ultra Fund

-0.26

Correlation Coefficient

Guidepath Managed  Ultra Fund

Very good diversification

The 3 months correlation between Guidepath and Ultra is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Ultra Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund A and Guidepath Managed 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 Guidepath Managed Futures are associated (or correlated) with Ultra Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Fund A has no effect on the direction of Guidepath Managed i.e., Guidepath Managed and Ultra Fund go up and down completely randomly.

Pair Corralation between Guidepath Managed and Ultra Fund

Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Ultra Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidepath Managed Futures is 1.73 times less risky than Ultra Fund. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Ultra Fund A is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  8,190  in Ultra Fund A on September 13, 2024 and sell it today you would earn a total of  1,059  from holding Ultra Fund A or generate 12.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Guidepath Managed Futures  vs.  Ultra Fund A

Guidepath Managed Futures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ultra Fund A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Fund A are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultra Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guidepath Managed and Ultra Fund

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

The idea behind Guidepath Managed Futures and Ultra Fund A 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.