Correlation Between Guggenheim Risk and Stet Short

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

Diversification Opportunities for Guggenheim Risk and Stet Short

0.15

Correlation Coefficient

Guggenheim Risk  Stet Short

Average diversification

The 3 months correlation between Guggenheim and Stet is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed and Stet Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet Short Duration 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 Stet Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet Short Duration has no effect on the direction of Guggenheim Risk i.e., Guggenheim Risk and Stet Short go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Stet Short

Assuming the 90 days horizon Guggenheim Risk Managed is expected to under-perform the Stet Short. In addition to that, Guggenheim Risk is 12.29 times more volatile than Stet Short Duration. It trades about -0.28 of its total potential returns per unit of risk. Stet Short Duration is currently generating about -0.17 per unit of volatility. If you would invest  998.00  in Stet Short Duration on September 23, 2024 and sell it today you would lose (3.00) from holding Stet Short Duration or give up 0.3% 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.  Stet Short Duration

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.

Stet Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stet Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Stet Short 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 Stet Short

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

The idea behind Guggenheim Risk Managed and Stet Short Duration 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.