Correlation Between Guggenheim Directional and Guggenheim Styleplus

Can any of the company-specific risk be diversified away by investing in both Guggenheim Directional 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 Directional 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 Directional Allocation and Guggenheim Styleplus , you can compare the effects of market volatilities on Guggenheim Directional 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 Directional with a short position of Guggenheim Styleplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Directional and Guggenheim Styleplus.

Diversification Opportunities for Guggenheim Directional and Guggenheim Styleplus

0.98

Correlation Coefficient

Guggenheim Directional  Guggenheim Styleplus

Almost no diversification

The 3 months correlation between Guggenheim and Guggenheim is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Directional Allocat and Guggenheim Styleplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Styleplus and Guggenheim Directional 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 Directional Allocation 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 Directional i.e., Guggenheim Directional and Guggenheim Styleplus go up and down completely randomly.

Pair Corralation between Guggenheim Directional and Guggenheim Styleplus

Assuming the 90 days horizon Guggenheim Directional is expected to generate 1.33 times less return on investment than Guggenheim Styleplus. But when comparing it to its historical volatility, Guggenheim Directional Allocation is 1.4 times less risky than Guggenheim Styleplus. It trades about 0.21 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  1,293  in Guggenheim Styleplus on September 13, 2024 and sell it today you would earn a total of  148.00  from holding Guggenheim Styleplus or generate 11.45% return on investment over 90 days.

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

Guggenheim Directional Allocat  vs.  Guggenheim Styleplus

Guggenheim Directional

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Directional Allocation are ranked lower than 16 (%) 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.

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 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 Directional and Guggenheim Styleplus

The main advantage of trading using opposite Guggenheim Directional and Guggenheim Styleplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Directional 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 Directional Allocation 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.