Correlation Between Timbercreek Financial and Guild Holdings

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

By analyzing existing cross correlation between Timbercreek Financial Corp and Guild Holdings Co, you can compare the effects of market volatilities on Timbercreek Financial and Guild Holdings 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 Timbercreek Financial with a short position of Guild Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and Guild Holdings.

Diversification Opportunities for Timbercreek Financial and Guild Holdings

0.56

Correlation Coefficient

Timbercreek Financial  Guild Holdings

Very weak diversification

The 3 months correlation between Timbercreek and Guild is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings and Timbercreek Financial 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 Timbercreek Financial Corp are associated (or correlated) with Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Timbercreek Financial i.e., Timbercreek Financial and Guild Holdings go up and down completely randomly.

Pair Corralation between Timbercreek Financial and Guild Holdings

Assuming the 90 days horizon Timbercreek Financial Corp is expected to generate 1.46 times more return on investment than Guild Holdings. However, Timbercreek Financial is 1.46 times more volatile than Guild Holdings Co. It trades about 0.0 of its potential returns per unit of risk. Guild Holdings Co is currently generating about -0.15 per unit of risk. If you would invest  567.00  in Timbercreek Financial Corp on August 31, 2024 and sell it today you would lose (16.00) from holding Timbercreek Financial Corp or give up 2.82% of portfolio value over 90 days.

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

Timbercreek Financial Corp  vs.  Guild Holdings Co

Timbercreek Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Timbercreek Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Timbercreek Financial and Guild Holdings

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

The idea behind Timbercreek Financial Corp and Guild Holdings Co 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.