Correlation Between Moderate Strategy and Guidemark Large

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

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

Diversification Opportunities for Moderate Strategy and Guidemark Large

0.98

Correlation Coefficient

Moderate Strategy  Guidemark Large

Almost no diversification

The 3 months correlation between Moderate and Guidemark is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Strategy Fund and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap and Moderate Strategy 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 Moderate Strategy Fund are associated (or correlated) with Guidemark Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Moderate Strategy i.e., Moderate Strategy and Guidemark Large go up and down completely randomly.

Pair Corralation between Moderate Strategy and Guidemark Large

Assuming the 90 days horizon Moderate Strategy is expected to generate 2.36 times less return on investment than Guidemark Large. But when comparing it to its historical volatility, Moderate Strategy Fund is 2.12 times less risky than Guidemark Large. It trades about 0.26 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,147  in Guidemark Large Cap on April 30, 2025 and sell it today you would earn a total of  155.00  from holding Guidemark Large Cap or generate 13.51% return on investment over 90 days.

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

Moderate Strategy Fund  vs.  Guidemark Large Cap

Moderate Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Strategy Fund are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Moderate Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidemark Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidemark Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moderate Strategy and Guidemark Large

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

The idea behind Moderate Strategy Fund and Guidemark Large 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.