Correlation Between Guidestone Growth and Defensive Market

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Can any of the company-specific risk be diversified away by investing in both Guidestone Growth and Defensive Market 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 Guidestone Growth and Defensive Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidestone Growth Equity and Defensive Market Strategies, you can compare the effects of market volatilities on Guidestone Growth and Defensive Market 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 Guidestone Growth with a short position of Defensive Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidestone Growth and Defensive Market.

Diversification Opportunities for Guidestone Growth and Defensive Market

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Guidestone and Defensive is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Guidestone Growth Equity and Defensive Market Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defensive Market Str and Guidestone Growth 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 Guidestone Growth Equity are associated (or correlated) with Defensive Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defensive Market Str has no effect on the direction of Guidestone Growth i.e., Guidestone Growth and Defensive Market go up and down completely randomly.

Pair Corralation between Guidestone Growth and Defensive Market

Assuming the 90 days horizon Guidestone Growth Equity is expected to generate 2.34 times more return on investment than Defensive Market. However, Guidestone Growth is 2.34 times more volatile than Defensive Market Strategies. It trades about 0.3 of its potential returns per unit of risk. Defensive Market Strategies is currently generating about 0.31 per unit of risk. If you would invest  1,399  in Guidestone Growth Equity on April 10, 2025 and sell it today you would earn a total of  330.00  from holding Guidestone Growth Equity or generate 23.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Guidestone Growth Equity  vs.  Defensive Market Strategies

 Performance 
       Timeline  
Guidestone Growth Equity 

Risk-Adjusted Performance

Solid

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

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Defensive Market Strategies are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Defensive Market may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Guidestone Growth and Defensive Market Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guidestone Growth and Defensive Market

The main advantage of trading using opposite Guidestone Growth and Defensive Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidestone Growth position performs unexpectedly, Defensive Market 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 Defensive Market will offset losses from the drop in Defensive Market's long position.
The idea behind Guidestone Growth Equity and Defensive Market Strategies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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