Correlation Between Guggenheim Styleplus and Disney

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

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

Diversification Opportunities for Guggenheim Styleplus and Disney

0.9

Correlation Coefficient

Guggenheim Styleplus  Disney

Almost no diversification

The 3 months correlation between Guggenheim and Disney is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Styleplus and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Guggenheim Styleplus 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 Styleplus are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Guggenheim Styleplus i.e., Guggenheim Styleplus and Disney go up and down completely randomly.

Pair Corralation between Guggenheim Styleplus and Disney

Assuming the 90 days horizon Guggenheim Styleplus is expected to generate 4.99 times less return on investment than Disney. But when comparing it to its historical volatility, Guggenheim Styleplus is 2.5 times less risky than Disney. It trades about 0.08 of its potential returns per unit of risk. Walt Disney is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  9,486  in Walt Disney on January 25, 2024 and sell it today you would earn a total of  1,885  from holding Walt Disney or generate 19.87% return on investment over 90 days.

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

Guggenheim Styleplus   vs.  Walt Disney

Guggenheim Styleplus

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Styleplus are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Styleplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walt Disney

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guggenheim Styleplus and Disney

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

The idea behind Guggenheim Styleplus and Walt Disney 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..