Correlation Between Vanguard Information and Guidepath Tactical

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

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

Diversification Opportunities for Vanguard Information and Guidepath Tactical

0.96

Correlation Coefficient

Vanguard Information  Guidepath Tactical

Almost no diversification

The 3 months correlation between Vanguard and Guidepath is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and Guidepath Tactical Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Tactical and Vanguard Information 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 Vanguard Information Technology 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 Vanguard Information i.e., Vanguard Information and Guidepath Tactical go up and down completely randomly.

Pair Corralation between Vanguard Information and Guidepath Tactical

Assuming the 90 days horizon Vanguard Information Technology is expected to generate 1.83 times more return on investment than Guidepath Tactical. However, Vanguard Information is 1.83 times more volatile than Guidepath Tactical Allocation. It trades about 0.27 of its potential returns per unit of risk. Guidepath Tactical Allocation is currently generating about 0.13 per unit of risk. If you would invest  28,821  in Vanguard Information Technology on May 4, 2025 and sell it today you would earn a total of  5,713  from holding Vanguard Information Technology or generate 19.82% return on investment over 90 days.

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

Vanguard Information Technolog  vs.  Guidepath Tactical Allocation

Vanguard Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information showed solid returns over the last few months and may actually be approaching a breakup point.

Guidepath Tactical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Tactical Allocation are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guidepath Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Information and Guidepath Tactical

The main advantage of trading using opposite Vanguard Information and Guidepath Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Information 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 Vanguard Information Technology 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.