Correlation Between Guggenheim Market and Guggenheim Total

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

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

Diversification Opportunities for Guggenheim Market and Guggenheim Total

-0.79

Correlation Coefficient

Guggenheim Market  Guggenheim Total

Pay attention - limited upside

The 3 months correlation between Guggenheim and Guggenheim is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Market Neutral and Guggenheim Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Total Return and Guggenheim Market 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 Market Neutral are associated (or correlated) with Guggenheim Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Total Return has no effect on the direction of Guggenheim Market i.e., Guggenheim Market and Guggenheim Total go up and down completely randomly.

Pair Corralation between Guggenheim Market and Guggenheim Total

Assuming the 90 days horizon Guggenheim Market Neutral is expected to under-perform the Guggenheim Total. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guggenheim Market Neutral is 2.41 times less risky than Guggenheim Total. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Guggenheim Total Return is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,373  in Guggenheim Total Return on September 4, 2024 and sell it today you would earn a total of  19.00  from holding Guggenheim Total Return or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Guggenheim Market Neutral  vs.  Guggenheim Total Return

Guggenheim Market Neutral

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Market Neutral are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Guggenheim Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Guggenheim Total 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 Market and Guggenheim Total

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

The idea behind Guggenheim Market Neutral and Guggenheim Total Return 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.