Correlation Between Vanguard Reit and Guggenheim Risk

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

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

Diversification Opportunities for Vanguard Reit and Guggenheim Risk

0.94

Correlation Coefficient

Vanguard Reit  Guggenheim Risk

Almost no diversification

The 3 months correlation between VANGUARD and Guggenheim is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Reit Index and Guggenheim Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Risk Managed and Vanguard Reit 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 Vanguard Reit Index are associated (or correlated) with Guggenheim Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Risk Managed has no effect on the direction of Vanguard Reit i.e., Vanguard Reit and Guggenheim Risk go up and down completely randomly.

Pair Corralation between Vanguard Reit and Guggenheim Risk

Assuming the 90 days horizon Vanguard Reit is expected to generate 1.01 times less return on investment than Guggenheim Risk. In addition to that, Vanguard Reit is 1.28 times more volatile than Guggenheim Risk Managed. It trades about 0.22 of its total potential returns per unit of risk. Guggenheim Risk Managed is currently generating about 0.28 per unit of volatility. If you would invest  3,378  in Guggenheim Risk Managed on September 3, 2024 and sell it today you would earn a total of  142.00  from holding Guggenheim Risk Managed or generate 4.2% return on investment over 90 days.

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

Vanguard Reit Index  vs.  Guggenheim Risk Managed

Vanguard Reit Index

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Reit Index are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Reit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Risk Managed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Risk Managed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Reit and Guggenheim Risk

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

The idea behind Vanguard Reit Index and Guggenheim Risk Managed 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.