Correlation Between Guggenheim Market and Guggenheim Diversified

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

By analyzing existing cross correlation between Guggenheim Market Neutral and Guggenheim Diversified Income, you can compare the effects of market volatilities on Guggenheim Market and Guggenheim Diversified 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 Guggenheim Market with a short position of Guggenheim Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Market and Guggenheim Diversified.

Diversification Opportunities for Guggenheim Market and Guggenheim Diversified

0.0

Correlation Coefficient

Guggenheim Market  Guggenheim Diversified

Pay attention - limited upside

The 3 months correlation between Guggenheim and Guggenheim is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Market Neutral and Guggenheim Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Diversified and Guggenheim Market 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 Guggenheim Market Neutral are associated (or correlated) with Guggenheim Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Diversified has no effect on the direction of Guggenheim Market i.e., Guggenheim Market and Guggenheim Diversified go up and down completely randomly.

Pair Corralation between Guggenheim Market and Guggenheim Diversified

Assuming the 90 days horizon Guggenheim Market Neutral is expected to under-perform the Guggenheim Diversified. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Market Neutral is 2.84 times less risky than Guggenheim Diversified. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Guggenheim Diversified Income is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,342  in Guggenheim Diversified Income on February 17, 2024 and sell it today you would earn a total of  202.00  from holding Guggenheim Diversified Income or generate 8.63% return on investment over 90 days.

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

Guggenheim Market Neutral  vs.  Guggenheim Diversified Income

Guggenheim Market Neutral

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guggenheim Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guggenheim Market and Guggenheim Diversified

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

The idea behind Guggenheim Market Neutral and Guggenheim Diversified Income 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.