Correlation Between Guggenheim Risk and Intermediate Government

Can any of the company-specific risk be diversified away by investing in both Guggenheim Risk and Intermediate 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 Risk and Intermediate Government 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 Intermediate Government Bond, you can compare the effects of market volatilities on Guggenheim Risk and Intermediate 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 Risk with a short position of Intermediate Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Risk and Intermediate Government.

Diversification Opportunities for Guggenheim Risk and Intermediate Government

0.1

Correlation Coefficient

Guggenheim Risk  Intermediate Government

Average diversification

The 3 months correlation between Guggenheim and Intermediate is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Intermediate Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Government 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 Intermediate Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Government has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Intermediate Government go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Intermediate Government

Assuming the 90 days horizon Guggenheim Risk Managed is expected to under-perform the Intermediate Government. In addition to that, Guggenheim Risk is 11.46 times more volatile than Intermediate Government Bond. It trades about -0.12 of its total potential returns per unit of risk. Intermediate Government Bond is currently generating about -0.04 per unit of volatility. If you would invest  947.00  in Intermediate Government Bond on September 22, 2024 and sell it today you would lose (2.00) from holding Intermediate Government Bond or give up 0.21% of portfolio value over 90 days.

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

Guggenheim Risk Managed  vs.  Intermediate Government Bond

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.

Intermediate Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Intermediate 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 Risk and Intermediate Government

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

The idea behind Guggenheim Risk Managed and Intermediate Government Bond 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.