Correlation Between Target Retirement and Guidemark(r) Large

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

By analyzing existing cross correlation between Target Retirement 2040 and Guidemark Large Cap, you can compare the effects of market volatilities on Target Retirement and Guidemark(r) Large 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 Target Retirement with a short position of Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Guidemark(r) Large.

Diversification Opportunities for Target Retirement and Guidemark(r) Large

0.62

Correlation Coefficient

Target Retirement  Guidemark(r) Large

Poor diversification

The 3 months correlation between Target and Guidemark(r) is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap and Target Retirement 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 Target Retirement 2040 are associated (or correlated) with Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Target Retirement i.e., Target Retirement and Guidemark(r) Large go up and down completely randomly.

Pair Corralation between Target Retirement and Guidemark(r) Large

Assuming the 90 days horizon Target Retirement is expected to generate 1.21 times less return on investment than Guidemark(r) Large. But when comparing it to its historical volatility, Target Retirement 2040 is 1.51 times less risky than Guidemark(r) Large. It trades about 0.3 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,303  in Guidemark Large Cap on April 9, 2025 and sell it today you would earn a total of  109.00  from holding Guidemark Large Cap or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Target Retirement 2040  vs.  Guidemark Large Cap

Target Retirement 2040

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Target Retirement 2040 are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Target Retirement may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Guidemark Large Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Guidemark(r) Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Target Retirement and Guidemark(r) Large

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

The idea behind Target Retirement 2040 and Guidemark Large Cap 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.