Correlation Between Guggenheim World and Guggenheim Styleplus

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

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

Diversification Opportunities for Guggenheim World and Guggenheim Styleplus

0.91

Correlation Coefficient

Guggenheim World  Guggenheim Styleplus

Almost no diversification

The 3 months correlation between Guggenheim and Guggenheim is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim World Equity and Guggenheim Styleplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Styleplus and Guggenheim World 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 World Equity are associated (or correlated) with Guggenheim Styleplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Styleplus has no effect on the direction of Guggenheim World i.e., Guggenheim World and Guggenheim Styleplus go up and down completely randomly.

Pair Corralation between Guggenheim World and Guggenheim Styleplus

Assuming the 90 days horizon Guggenheim World is expected to generate 3.1 times less return on investment than Guggenheim Styleplus. But when comparing it to its historical volatility, Guggenheim World Equity is 1.45 times less risky than Guggenheim Styleplus. It trades about 0.1 of its potential returns per unit of risk. Guggenheim Styleplus is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,396  in Guggenheim Styleplus on September 12, 2024 and sell it today you would earn a total of  210.00  from holding Guggenheim Styleplus or generate 8.76% return on investment over 90 days.

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

Guggenheim World Equity  vs.  Guggenheim Styleplus

Guggenheim World Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim World Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Styleplus

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Styleplus are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Guggenheim Styleplus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guggenheim World and Guggenheim Styleplus

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

The idea behind Guggenheim World Equity and Guggenheim Styleplus 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.