Correlation Between Large Cap and Guidepath Conservative

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

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

Diversification Opportunities for Large Cap and Guidepath Conservative

0.78

Correlation Coefficient

Large Cap  Guidepath Conservative

Poor diversification

The 3 months correlation between Large and Guidepath is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Guidepath Conservative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Conservative and Large Cap 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 Large Cap Growth Profund are associated (or correlated) with Guidepath Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Conservative has no effect on the direction of Large Cap i.e., Large Cap and Guidepath Conservative go up and down completely randomly.

Pair Corralation between Large Cap and Guidepath Conservative

Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 16.57 times more return on investment than Guidepath Conservative. However, Large Cap is 16.57 times more volatile than Guidepath Conservative Income. It trades about 0.25 of its potential returns per unit of risk. Guidepath Conservative Income is currently generating about 0.38 per unit of risk. If you would invest  4,493  in Large Cap Growth Profund on May 11, 2025 and sell it today you would earn a total of  573.00  from holding Large Cap Growth Profund or generate 12.75% return on investment over 90 days.

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

Large Cap Growth Profund  vs.  Guidepath Conservative Income

Large Cap Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large Cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Guidepath Conservative

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Conservative Income are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Guidepath Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large Cap and Guidepath Conservative

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

The idea behind Large Cap Growth Profund and Guidepath Conservative Income 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.