Correlation Between Guidemark Large and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Guidemark Large and Municipal Bond 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 Guidemark Large and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Large Cap and Municipal Bond Portfolio, you can compare the effects of market volatilities on Guidemark Large and Municipal Bond 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 Guidemark Large with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Municipal Bond.
Diversification Opportunities for Guidemark Large and Municipal Bond
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guidemark and Municipal is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Municipal Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond Portfolio and Guidemark Large 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 Guidemark Large Cap are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond Portfolio has no effect on the direction of Guidemark Large i.e., Guidemark Large and Municipal Bond go up and down completely randomly.
Pair Corralation between Guidemark Large and Municipal Bond
Assuming the 90 days horizon Guidemark Large Cap is expected to generate 6.68 times more return on investment than Municipal Bond. However, Guidemark Large is 6.68 times more volatile than Municipal Bond Portfolio. It trades about 0.21 of its potential returns per unit of risk. Municipal Bond Portfolio is currently generating about 0.15 per unit of risk. If you would invest 1,209 in Guidemark Large Cap on May 29, 2025 and sell it today you would earn a total of 120.00 from holding Guidemark Large Cap or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark Large Cap vs. Municipal Bond Portfolio
Performance |
| Timeline |
| Guidemark Large Cap |
| Municipal Bond Portfolio |
Guidemark Large and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark Large and Municipal Bond
The main advantage of trading using opposite Guidemark Large and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Guidemark Large vs. Guidemark E Fixed | Guidemark Large vs. Guidemark Large Cap | Guidemark Large vs. Guidemark Smallmid Cap | Guidemark Large vs. Guidemark World Ex Us |
| Municipal Bond vs. Siit Emerging Markets | Municipal Bond vs. Pnc Emerging Markets | Municipal Bond vs. Doubleline Emerging Markets | Municipal Bond vs. Investec Emerging Markets |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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