Correlation Between Guggenheim Managed and Dreyfusnewton International

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

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

Diversification Opportunities for Guggenheim Managed and Dreyfusnewton International

0.23

Correlation Coefficient

Guggenheim Managed  Dreyfusnewton International

Modest diversification

The 3 months correlation between Guggenheim and Dreyfusnewton is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Managed Futures and Dreyfusnewton International Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusnewton International and Guggenheim Managed 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 Managed Futures are associated (or correlated) with Dreyfusnewton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusnewton International has no effect on the direction of Guggenheim Managed i.e., Guggenheim Managed and Dreyfusnewton International go up and down completely randomly.

Pair Corralation between Guggenheim Managed and Dreyfusnewton International

Assuming the 90 days horizon Guggenheim Managed Futures is expected to generate 0.19 times more return on investment than Dreyfusnewton International. However, Guggenheim Managed Futures is 5.27 times less risky than Dreyfusnewton International. It trades about -0.07 of its potential returns per unit of risk. Dreyfusnewton International Equity is currently generating about -0.15 per unit of risk. If you would invest  2,124  in Guggenheim Managed Futures on September 21, 2024 and sell it today you would lose (79.00) from holding Guggenheim Managed Futures or give up 3.72% of portfolio value over 90 days.

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

Guggenheim Managed Futures  vs.  Dreyfusnewton International Eq

Guggenheim Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Managed Futures has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guggenheim Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfusnewton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfusnewton International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Guggenheim Managed and Dreyfusnewton International

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

The idea behind Guggenheim Managed Futures and Dreyfusnewton International Equity 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.