Correlation Between Guggenheim Mid and Touchstone Sustainability

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

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

Diversification Opportunities for Guggenheim Mid and Touchstone Sustainability

-0.19

Correlation Coefficient

Guggenheim Mid  Touchstone Sustainability

Good diversification

The 3 months correlation between Guggenheim and Touchstone is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Mid Cap and Touchstone Sustainability And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sustainability and Guggenheim Mid 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 Mid Cap are associated (or correlated) with Touchstone Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sustainability has no effect on the direction of Guggenheim Mid i.e., Guggenheim Mid and Touchstone Sustainability go up and down completely randomly.

Pair Corralation between Guggenheim Mid and Touchstone Sustainability

Assuming the 90 days horizon Guggenheim Mid Cap is expected to generate 1.22 times more return on investment than Touchstone Sustainability. However, Guggenheim Mid is 1.22 times more volatile than Touchstone Sustainability And. It trades about -0.01 of its potential returns per unit of risk. Touchstone Sustainability And is currently generating about -0.14 per unit of risk. If you would invest  4,134  in Guggenheim Mid Cap on September 24, 2024 and sell it today you would lose (50.00) from holding Guggenheim Mid Cap or give up 1.21% of portfolio value over 90 days.

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

Guggenheim Mid Cap  vs.  Touchstone Sustainability And

Guggenheim Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Touchstone Sustainability

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Sustainability And 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.

Pair Trading with Guggenheim Mid and Touchstone Sustainability

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

The idea behind Guggenheim Mid Cap and Touchstone Sustainability And 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.