Correlation Between Hood River and Guidemark Smallmid

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

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

Diversification Opportunities for Hood River and Guidemark Smallmid

0.88

Correlation Coefficient

Hood River  Guidemark Smallmid

Very poor diversification

The 3 months correlation between Hood and Guidemark is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hood River New 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 Hood River 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 Hood River New 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 Hood River i.e., Hood River and Guidemark Smallmid go up and down completely randomly.

Pair Corralation between Hood River and Guidemark Smallmid

Assuming the 90 days horizon Hood River New is expected to generate 0.91 times more return on investment than Guidemark Smallmid. However, Hood River New is 1.1 times less risky than Guidemark Smallmid. It trades about 0.29 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.16 per unit of risk. If you would invest  1,251  in Hood River New on August 16, 2024 and sell it today you would earn a total of  104.00  from holding Hood River New or generate 8.31% return on investment over 90 days.

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

Hood River New  vs.  Guidemark Smallmid Cap

Hood River New

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hood River New are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hood River showed solid returns over the last few months and may actually be approaching a breakup point.

Guidemark Smallmid Cap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hood River and Guidemark Smallmid

The main advantage of trading using opposite Hood River and Guidemark Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hood River 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 Hood River New 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.