Correlation Between Guggenheim Strategic and FAM

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

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

Diversification Opportunities for Guggenheim Strategic and FAM

0.82

Correlation Coefficient

Guggenheim Strategic  FAM

Very poor diversification

The 3 months correlation between Guggenheim and FAM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM and Guggenheim Strategic 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 Strategic Opportunities are associated (or correlated) with FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and FAM go up and down completely randomly.

Pair Corralation between Guggenheim Strategic and FAM

Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 1.23 times less return on investment than FAM. In addition to that, Guggenheim Strategic is 1.44 times more volatile than FAM. It trades about 0.05 of its total potential returns per unit of risk. FAM is currently generating about 0.09 per unit of volatility. If you would invest  488.00  in FAM on September 12, 2024 and sell it today you would earn a total of  186.00  from holding FAM or generate 38.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	88.89%
Values	Daily Returns

Guggenheim Strategic Opportuni  vs.  FAM

Guggenheim Strategic

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

FAM

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days FAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, FAM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guggenheim Strategic and FAM

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

The idea behind Guggenheim Strategic Opportunities and FAM 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.