Correlation Between Guggenheim Floating and Us Government

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

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

Diversification Opportunities for Guggenheim Floating and Us Government

0.5

Correlation Coefficient

Guggenheim Floating  Us Government

Very weak diversification

The 3 months correlation between Guggenheim and UGSDX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Floating Rate and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and Guggenheim Floating 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 Floating Rate are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Guggenheim Floating i.e., Guggenheim Floating and Us Government go up and down completely randomly.

Pair Corralation between Guggenheim Floating and Us Government

Assuming the 90 days horizon Guggenheim Floating Rate is expected to generate 1.62 times more return on investment than Us Government. However, Guggenheim Floating is 1.62 times more volatile than Us Government Securities. It trades about 0.2 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.07 per unit of risk. If you would invest  2,376  in Guggenheim Floating Rate on September 14, 2024 and sell it today you would earn a total of  56.00  from holding Guggenheim Floating Rate or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Guggenheim Floating Rate  vs.  Us Government Securities

Guggenheim Floating Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Government Securities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Us Government Securities are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Us Government 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 Floating and Us Government

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

The idea behind Guggenheim Floating Rate and Us Government Securities 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.