Correlation Between Baron Real and Guggenheim Risk

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

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

Diversification Opportunities for Baron Real and Guggenheim Risk

0.29

Correlation Coefficient

Baron Real  Guggenheim Risk

Modest diversification

The 3 months correlation between Baron and Guggenheim is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate 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 Baron Real 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 Baron Real Estate 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 Baron Real i.e., Baron Real and Guggenheim Risk go up and down completely randomly.

Pair Corralation between Baron Real and Guggenheim Risk

Assuming the 90 days horizon Baron Real Estate is expected to under-perform the Guggenheim Risk. In addition to that, Baron Real is 1.28 times more volatile than Guggenheim Risk Managed. It trades about -0.09 of its total potential returns per unit of risk. Guggenheim Risk Managed is currently generating about 0.02 per unit of volatility. If you would invest  3,191  in Guggenheim Risk Managed on December 30, 2024 and sell it today you would earn a total of  27.00  from holding Guggenheim Risk Managed or generate 0.85% return on investment over 90 days.

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

Baron Real Estate  vs.  Guggenheim Risk Managed

Baron Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Guggenheim Risk Managed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Risk Managed are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Baron Real and Guggenheim Risk

The main advantage of trading using opposite Baron Real and Guggenheim Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real 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 Baron Real Estate 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.

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 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.