Correlation Between Guidepath(r) Flexible and Muzinich

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

By analyzing existing cross correlation between Guidepath Flexible Income and Muzinich High Yield, you can compare the effects of market volatilities on Guidepath(r) Flexible and Muzinich 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 Guidepath(r) Flexible with a short position of Muzinich. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Flexible and Muzinich.

Diversification Opportunities for Guidepath(r) Flexible and Muzinich

0.98

Correlation Coefficient

Guidepath(r) Flexible  Muzinich

Almost no diversification

The 3 months correlation between Guidepath(r) and Muzinich is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Flexible Income and Muzinich High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muzinich High Yield and Guidepath(r) Flexible 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 Guidepath Flexible Income are associated (or correlated) with Muzinich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muzinich High Yield has no effect on the direction of Guidepath(r) Flexible i.e., Guidepath(r) Flexible and Muzinich go up and down completely randomly.

Pair Corralation between Guidepath(r) Flexible and Muzinich

Assuming the 90 days horizon Guidepath(r) Flexible is expected to generate 1.75 times less return on investment than Muzinich. But when comparing it to its historical volatility, Guidepath Flexible Income is 1.38 times less risky than Muzinich. It trades about 0.3 of its potential returns per unit of risk. Muzinich High Yield is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  771.00  in Muzinich High Yield on April 23, 2025 and sell it today you would earn a total of  32.00  from holding Muzinich High Yield or generate 4.15% return on investment over 90 days.

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

Guidepath Flexible Income  vs.  Muzinich High Yield

Guidepath Flexible Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Flexible Income are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidepath(r) Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Muzinich High Yield

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Muzinich High Yield are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Muzinich is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guidepath(r) Flexible and Muzinich

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

The idea behind Guidepath Flexible Income and Muzinich High Yield 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..