Correlation Between Pace Smallmedium and Guidepath Growth

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

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

Diversification Opportunities for Pace Smallmedium and Guidepath Growth

0.97

Correlation Coefficient

Pace Smallmedium  Guidepath Growth

Almost no diversification

The 3 months correlation between Pace and Guidepath is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value 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 Pace Smallmedium 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 Pace Smallmedium Value 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 Pace Smallmedium i.e., Pace Smallmedium and Guidepath Growth go up and down completely randomly.

Pair Corralation between Pace Smallmedium and Guidepath Growth

Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 1.67 times more return on investment than Guidepath Growth. However, Pace Smallmedium is 1.67 times more volatile than Guidepath Growth Allocation. It trades about 0.18 of its potential returns per unit of risk. Guidepath Growth Allocation is currently generating about 0.25 per unit of risk. If you would invest  1,621  in Pace Smallmedium Value on April 16, 2025 and sell it today you would earn a total of  59.00  from holding Pace Smallmedium Value or generate 3.64% return on investment over 90 days.

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

Pace Smallmedium Value  vs.  Guidepath Growth Allocation

Pace Smallmedium Value

Risk-Adjusted Performance

Solid

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

Guidepath Growth All

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Growth Allocation are ranked lower than 27 (%) 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.

Pair Trading with Pace Smallmedium and Guidepath Growth

The main advantage of trading using opposite Pace Smallmedium and Guidepath Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Smallmedium 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 Pace Smallmedium Value 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.