Correlation Between Growth Fund and Guidepath Tactical

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

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

Diversification Opportunities for Growth Fund and Guidepath Tactical

0.96

Correlation Coefficient

Growth Fund  Guidepath Tactical

Almost no diversification

The 3 months correlation between Growth and Guidepath is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund I and Guidepath Tactical Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Tactical and Growth Fund 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 Growth Fund I are associated (or correlated) with Guidepath Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Tactical has no effect on the direction of Growth Fund i.e., Growth Fund and Guidepath Tactical go up and down completely randomly.

Pair Corralation between Growth Fund and Guidepath Tactical

Assuming the 90 days horizon Growth Fund I is expected to generate 1.64 times more return on investment than Guidepath Tactical. However, Growth Fund is 1.64 times more volatile than Guidepath Tactical Allocation. It trades about 0.31 of its potential returns per unit of risk. Guidepath Tactical Allocation is currently generating about 0.21 per unit of risk. If you would invest  5,408  in Growth Fund I on April 30, 2025 and sell it today you would earn a total of  1,041  from holding Growth Fund I or generate 19.25% return on investment over 90 days.

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

Growth Fund I  vs.  Guidepath Tactical Allocation

Growth Fund I

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund I are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Growth Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Guidepath Tactical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Tactical Allocation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidepath Tactical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Growth Fund and Guidepath Tactical

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

The idea behind Growth Fund I and Guidepath Tactical 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.