Correlation Between Applied Finance and Guidepath(r) Managed

Can any of the company-specific risk be diversified away by investing in both Applied Finance and Guidepath(r) Managed 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 Applied Finance and Guidepath(r) Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Finance Explorer and Guidepath Managed Futures, you can compare the effects of market volatilities on Applied Finance and Guidepath(r) Managed 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 Applied Finance with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Guidepath(r) Managed.

Diversification Opportunities for Applied Finance and Guidepath(r) Managed

-0.19

Correlation Coefficient

Applied Finance  Guidepath(r) Managed

Good diversification

The 3 months correlation between Applied and Guidepath(r) is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Guidepath(r) Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Applied Finance i.e., Applied Finance and Guidepath(r) Managed go up and down completely randomly.

Pair Corralation between Applied Finance and Guidepath(r) Managed

Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Guidepath(r) Managed. In addition to that, Applied Finance is 1.28 times more volatile than Guidepath Managed Futures. It trades about -0.05 of its total potential returns per unit of risk. Guidepath Managed Futures is currently generating about 0.03 per unit of volatility. If you would invest  662.00  in Guidepath Managed Futures on August 26, 2025 and sell it today you would earn a total of  8.00  from holding Guidepath Managed Futures or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Applied Finance Explorer  vs.  Guidepath Managed Futures

Applied Finance Explorer

Risk-Adjusted Performance

Weakest

Over the last 90 days Applied Finance Explorer has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Applied Finance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidepath Managed Futures

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Managed Futures are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidepath(r) Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Finance and Guidepath(r) Managed

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

The idea behind Applied Finance Explorer and Guidepath Managed Futures 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.