Correlation Between Guggenheim Strategic and Special Opportunities

Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic and Special Opportunities 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 Special Opportunities 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 Special Opportunities Closed, you can compare the effects of market volatilities on Guggenheim Strategic and Special Opportunities 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 Special Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Special Opportunities.

Diversification Opportunities for Guggenheim Strategic and Special Opportunities

0.75

Correlation Coefficient

Guggenheim Strategic  Special Opportunities

Poor diversification

The 3 months correlation between Guggenheim and Special is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Special Opportunities Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Special Opportunities 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 Special Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Special Opportunities has no effect on the direction of Guggenheim Strategic i.e., Guggenheim Strategic and Special Opportunities go up and down completely randomly.

Pair Corralation between Guggenheim Strategic and Special Opportunities

Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 17.29 times less return on investment than Special Opportunities. But when comparing it to its historical volatility, Guggenheim Strategic Opportunities is 1.55 times less risky than Special Opportunities. It trades about 0.01 of its potential returns per unit of risk. Special Opportunities Closed is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,358  in Special Opportunities Closed on September 24, 2024 and sell it today you would earn a total of  101.00  from holding Special Opportunities Closed or generate 7.44% return on investment over 90 days.

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

Guggenheim Strategic Opportuni  vs.  Special Opportunities Closed

Guggenheim Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Strategic Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Special Opportunities

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Special Opportunities Closed are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak basic indicators, Special Opportunities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guggenheim Strategic and Special Opportunities

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

The idea behind Guggenheim Strategic Opportunities and Special Opportunities Closed 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.