Correlation Between Guggenheim Risk and Federated Mdt

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

Diversification Opportunities for Guggenheim Risk and Federated Mdt

0.4

Correlation Coefficient

Guggenheim Risk  Federated Mdt

Very weak diversification

The 3 months correlation between Guggenheim and Federated is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Federated Mdt Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Balanced 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Balanced has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Federated Mdt go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Federated Mdt

Assuming the 90 days horizon Guggenheim Risk is expected to generate 1.72 times less return on investment than Federated Mdt. In addition to that, Guggenheim Risk is 1.6 times more volatile than Federated Mdt Balanced. It trades about 0.08 of its total potential returns per unit of risk. Federated Mdt Balanced is currently generating about 0.23 per unit of volatility. If you would invest  2,271  in Federated Mdt Balanced on September 4, 2024 and sell it today you would earn a total of  156.00  from holding Federated Mdt Balanced or generate 6.87% return on investment over 90 days.

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

Guggenheim Risk Managed  vs.  Federated Mdt Balanced

Guggenheim Risk Managed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Risk Managed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Mdt Balanced

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Balanced are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Federated Mdt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guggenheim Risk and Federated Mdt

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

The idea behind Guggenheim Risk Managed and Federated Mdt Balanced 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.