Correlation Between Guidemark Large and Absolute Capital

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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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Guidemark Large Cap  vs.  ABSOLUTE CAPITAL DEFENDER

 Performance 
       Timeline  
Guidemark Large Cap 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 3 (%) 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.
Absolute Capital Defender 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Capital Defender are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Absolute Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.
The idea behind Guidemark Large Cap and Absolute Capital Defender 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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