Correlation Between US Global and Guggenheim Alpha

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

By analyzing existing cross correlation between US Global Jets and Guggenheim Alpha Opportunity, you can compare the effects of market volatilities on US Global and Guggenheim Alpha 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 US Global with a short position of Guggenheim Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Guggenheim Alpha.

Diversification Opportunities for US Global and Guggenheim Alpha

0.61

Correlation Coefficient

US Global  Guggenheim Alpha

Poor diversification

The 3 months correlation between JETS and Guggenheim is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets and Guggenheim Alpha Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Alpha Opp and US Global 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 US Global Jets are associated (or correlated) with Guggenheim Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Alpha Opp has no effect on the direction of US Global i.e., US Global and Guggenheim Alpha go up and down completely randomly.

Pair Corralation between US Global and Guggenheim Alpha

Given the investment horizon of 90 days US Global Jets is expected to generate 4.3 times more return on investment than Guggenheim Alpha. However, US Global is 4.3 times more volatile than Guggenheim Alpha Opportunity. It trades about 0.07 of its potential returns per unit of risk. Guggenheim Alpha Opportunity is currently generating about -0.01 per unit of risk. If you would invest  2,037  in US Global Jets on January 25, 2024 and sell it today you would earn a total of  46.00  from holding US Global Jets or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

US Global Jets  vs.  Guggenheim Alpha Opportunity

US Global Jets

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Guggenheim Alpha Opp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Alpha Opportunity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Guggenheim Alpha is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Global and Guggenheim Alpha

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

The idea behind US Global Jets and Guggenheim Alpha Opportunity 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.