Correlation Between Us Government and Guggenheim Directional

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

By analyzing existing cross correlation between Us Government Plus and Guggenheim Directional Allocation, you can compare the effects of market volatilities on Us Government and Guggenheim Directional 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 Us Government with a short position of Guggenheim Directional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Guggenheim Directional.

Diversification Opportunities for Us Government and Guggenheim Directional

-0.81

Correlation Coefficient

Us Government  Guggenheim Directional

Pay attention - limited upside

The 3 months correlation between GVPIX and Guggenheim is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and Guggenheim Directional Allocat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Directional and Us Government 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 Us Government Plus are associated (or correlated) with Guggenheim Directional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Directional has no effect on the direction of Us Government i.e., Us Government and Guggenheim Directional go up and down completely randomly.

Pair Corralation between Us Government and Guggenheim Directional

Assuming the 90 days horizon Us Government Plus is expected to under-perform the Guggenheim Directional. In addition to that, Us Government is 1.6 times more volatile than Guggenheim Directional Allocation. It trades about -0.1 of its total potential returns per unit of risk. Guggenheim Directional Allocation is currently generating about 0.24 per unit of volatility. If you would invest  1,604  in Guggenheim Directional Allocation on September 5, 2024 and sell it today you would earn a total of  174.00  from holding Guggenheim Directional Allocation or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Us Government Plus  vs.  Guggenheim Directional Allocat

Us Government Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guggenheim Directional

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Directional Allocation are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Guggenheim Directional may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Us Government and Guggenheim Directional

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

The idea behind Us Government Plus and Guggenheim Directional Allocation 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.