Correlation Between Guild HoldingsCo and Timbercreek Financial

Can any of the company-specific risk be diversified away by investing in both Guild HoldingsCo and Timbercreek Financial 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 Guild HoldingsCo and Timbercreek Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guild HoldingsCo and Timbercreek Financial Corp, you can compare the effects of market volatilities on Guild HoldingsCo and Timbercreek Financial 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 Guild HoldingsCo with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild HoldingsCo and Timbercreek Financial.

Diversification Opportunities for Guild HoldingsCo and Timbercreek Financial

-0.21

Correlation Coefficient

Guild HoldingsCo  Timbercreek Financial

Very good diversification

The 3 months correlation between Guild and Timbercreek is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Guild HoldingsCo and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and Guild HoldingsCo 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 Guild HoldingsCo are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Guild HoldingsCo i.e., Guild HoldingsCo and Timbercreek Financial go up and down completely randomly.

Pair Corralation between Guild HoldingsCo and Timbercreek Financial

Given the investment horizon of 90 days Guild HoldingsCo is expected to under-perform the Timbercreek Financial. In addition to that, Guild HoldingsCo is 1.41 times more volatile than Timbercreek Financial Corp. It trades about -0.22 of its total potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.05 per unit of volatility. If you would invest  555.00  in Timbercreek Financial Corp on February 4, 2024 and sell it today you would earn a total of  5.00  from holding Timbercreek Financial Corp or generate 0.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Guild HoldingsCo  vs.  Timbercreek Financial Corp

Guild HoldingsCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild HoldingsCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Guild HoldingsCo is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Timbercreek Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timbercreek Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish basic indicators, Timbercreek Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Guild HoldingsCo and Timbercreek Financial

The main advantage of trading using opposite Guild HoldingsCo and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guild HoldingsCo position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.

The idea behind Guild HoldingsCo and Timbercreek Financial Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.