Correlation Between Guidepath Growth and Guidemark Smallmid

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

By analyzing existing cross correlation between Guidepath Growth Allocation and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Guidepath Growth and Guidemark Smallmid 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 Growth with a short position of Guidemark Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Growth and Guidemark Smallmid.

Diversification Opportunities for Guidepath Growth and Guidemark Smallmid

0.5

Correlation Coefficient

Guidepath Growth  Guidemark Smallmid

Very weak diversification

The 3 months correlation between Guidepath and Guidemark is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Growth Allocation and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap and Guidepath Growth 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 Growth Allocation are associated (or correlated) with Guidemark Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Guidepath Growth i.e., Guidepath Growth and Guidemark Smallmid go up and down completely randomly.

Pair Corralation between Guidepath Growth and Guidemark Smallmid

Assuming the 90 days horizon Guidepath Growth is expected to generate 1.02 times less return on investment than Guidemark Smallmid. But when comparing it to its historical volatility, Guidepath Growth Allocation is 1.52 times less risky than Guidemark Smallmid. It trades about 0.31 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,765  in Guidemark Smallmid Cap on April 30, 2025 and sell it today you would earn a total of  254.00  from holding Guidemark Smallmid Cap or generate 14.39% return on investment over 90 days.

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

Guidepath Growth Allocation  vs.  Guidemark Smallmid Cap

Guidepath Growth All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Growth Allocation are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidepath Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Guidemark Smallmid Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guidepath Growth and Guidemark Smallmid

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

The idea behind Guidepath Growth Allocation and Guidemark Smallmid Cap 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.