Correlation Between Health Care and Guidepath Growth

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

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

Diversification Opportunities for Health Care and Guidepath Growth

0.13

Correlation Coefficient

Health Care  Guidepath Growth

Average diversification

The 3 months correlation between Health and Guidepath is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Guidepath Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Growth All and Health Care 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 Health Care Ultrasector are associated (or correlated) with Guidepath Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Growth All has no effect on the direction of Health Care i.e., Health Care and Guidepath Growth go up and down completely randomly.

Pair Corralation between Health Care and Guidepath Growth

Assuming the 90 days horizon Health Care Ultrasector is expected to under-perform the Guidepath Growth. In addition to that, Health Care is 2.48 times more volatile than Guidepath Growth Allocation. It trades about -0.07 of its total potential returns per unit of risk. Guidepath Growth Allocation is currently generating about 0.21 per unit of volatility. If you would invest  1,752  in Guidepath Growth Allocation on May 5, 2025 and sell it today you would earn a total of  166.00  from holding Guidepath Growth Allocation or generate 9.47% return on investment over 90 days.

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

Health Care Ultrasector  vs.  Guidepath Growth Allocation

Health Care Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Care Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidepath Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Health Care and Guidepath Growth

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

The idea behind Health Care Ultrasector and Guidepath Growth Allocation 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.