Correlation Between IShares Trust and Guidepath Conservative

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

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

Diversification Opportunities for IShares Trust and Guidepath Conservative

0.89

Correlation Coefficient

IShares Trust  Guidepath Conservative

Very poor diversification

The 3 months correlation between IShares and Guidepath is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Guidepath Conservative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Conservative and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Guidepath Conservative go up and down completely randomly.

Pair Corralation between IShares Trust and Guidepath Conservative

Given the investment horizon of 90 days iShares Trust is expected to generate 2.29 times more return on investment than Guidepath Conservative. However, IShares Trust is 2.29 times more volatile than Guidepath Conservative Income. It trades about 0.3 of its potential returns per unit of risk. Guidepath Conservative Income is currently generating about 0.1 per unit of risk. If you would invest  2,473  in iShares Trust on May 1, 2025 and sell it today you would earn a total of  73.00  from holding iShares Trust or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

iShares Trust   vs.  Guidepath Conservative Income

iShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Guidepath Conservative

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Conservative Income are ranked lower than 7 (%) 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 IShares Trust and Guidepath Conservative

The main advantage of trading using opposite IShares Trust and Guidepath Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 iShares Trust 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.