Correlation Between Guggenheim Risk and Columbia Mid

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

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

Diversification Opportunities for Guggenheim Risk and Columbia Mid

-0.38

Correlation Coefficient

Guggenheim Risk  Columbia Mid

Very good diversification

The 3 months correlation between Guggenheim and Columbia is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Columbia Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Mid Cap and Guggenheim Risk 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 Risk Managed are associated (or correlated) with Columbia Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Mid Cap has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Columbia Mid go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Columbia Mid

Assuming the 90 days horizon Guggenheim Risk Managed is expected to under-perform the Columbia Mid. In addition to that, Guggenheim Risk is 1.28 times more volatile than Columbia Mid Cap. It trades about -0.13 of its total potential returns per unit of risk. Columbia Mid Cap is currently generating about 0.11 per unit of volatility. If you would invest  1,561  in Columbia Mid Cap on September 28, 2024 and sell it today you would earn a total of  53.00  from holding Columbia Mid Cap or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.74%
Values	Daily Returns

Guggenheim Risk Managed  vs.  Columbia Mid Cap

Guggenheim Risk Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Risk Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Columbia Mid Cap

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Columbia Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Mid 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 Risk and Columbia Mid

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

The idea behind Guggenheim Risk Managed and Columbia Mid Cap 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.