Correlation Between Guggenheim Total and Calvert Long-term

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

By analyzing existing cross correlation between Guggenheim Total Return and Calvert Long Term Income, you can compare the effects of market volatilities on Guggenheim Total and Calvert Long-term 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 Total with a short position of Calvert Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Total and Calvert Long-term.

Diversification Opportunities for Guggenheim Total and Calvert Long-term

1.0

Correlation Coefficient

Guggenheim Total  Calvert Long-term

No risk reduction

The 3 months correlation between Guggenheim and Calvert is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Total Return and Calvert Long Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Long Term and Guggenheim Total 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 Total Return are associated (or correlated) with Calvert Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Long Term has no effect on the direction of Guggenheim Total i.e., Guggenheim Total and Calvert Long-term go up and down completely randomly.

Pair Corralation between Guggenheim Total and Calvert Long-term

Assuming the 90 days horizon Guggenheim Total Return is expected to generate 1.05 times more return on investment than Calvert Long-term. However, Guggenheim Total is 1.05 times more volatile than Calvert Long Term Income. It trades about 0.1 of its potential returns per unit of risk. Calvert Long Term Income is currently generating about 0.1 per unit of risk. If you would invest  2,362  in Guggenheim Total Return on August 31, 2024 and sell it today you would earn a total of  18.00  from holding Guggenheim Total Return or generate 0.76% return on investment over 90 days.

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

Guggenheim Total Return  vs.  Calvert Long Term Income

Guggenheim Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Calvert Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guggenheim Total and Calvert Long-term

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

The idea behind Guggenheim Total Return and Calvert Long Term Income 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.