# Correlation Between Guidemark Large and Absolute Capital

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

## Diversification Opportunities for Guidemark Large and Absolute Capital

0.27 | Correlation Coefficient |

### Modest diversification

The 3 months correlation between Guidemark and Absolute is

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

Assuming the 90 days horizon Guidemark Large Cap is expected to generate 1.97 times more return on investment than Absolute Capital. However, Guidemark Large is 1.97 times more volatile than Absolute Capital Defender. It trades about 0.26 of its potential returns per unit of risk. Absolute Capital Defender is currently generating about 0.26 per unit of risk. If you would invest

**1,038**in Guidemark Large Cap on**December 3, 2023**and sell it today you would**earn a total of 40.00**from holding Guidemark Large Cap or generate**3.85%**return on investment over**90**days.Time Period | 3 Months [change] |

Direction | Moves Together |

Strength | Very Weak |

Accuracy | 95.45% |

Values | Daily Returns |

## Guidemark Large Cap vs. ABSOLUTE CAPITAL DEFENDER

Performance |

Timeline |

Guidemark Large Cap |

Absolute Capital Defender |

## Guidemark Large and Absolute Capital Volatility Contrast

Predicted Return Density |

Returns |

## Pair Trading with Guidemark Large and Absolute Capital

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

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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