Correlation Between Guggenheim Styleplus and Wilmington Large

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

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

Diversification Opportunities for Guggenheim Styleplus and Wilmington Large

0.69

Correlation Coefficient

Guggenheim Styleplus  Wilmington Large

Poor diversification

The 3 months correlation between Guggenheim and Wilmington is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Styleplus and Wilmington Large Cap Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Large Cap and Guggenheim Styleplus 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 Styleplus are associated (or correlated) with Wilmington Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Large Cap has no effect on the direction of Guggenheim Styleplus i.e., Guggenheim Styleplus and Wilmington Large go up and down completely randomly.

Pair Corralation between Guggenheim Styleplus and Wilmington Large

Assuming the 90 days horizon Guggenheim Styleplus is expected to generate 3.57 times less return on investment than Wilmington Large. In addition to that, Guggenheim Styleplus is 1.64 times more volatile than Wilmington Large Cap Strategy. It trades about 0.01 of its total potential returns per unit of risk. Wilmington Large Cap Strategy is currently generating about 0.08 per unit of volatility. If you would invest  2,716  in Wilmington Large Cap Strategy on October 10, 2024 and sell it today you would earn a total of  489.00  from holding Wilmington Large Cap Strategy or generate 18.0% return on investment over 90 days.

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

Guggenheim Styleplus   vs.  Wilmington Large Cap Strategy

Guggenheim Styleplus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Styleplus has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Wilmington Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Large Cap Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Wilmington Large 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 Styleplus and Wilmington Large

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

The idea behind Guggenheim Styleplus and Wilmington Large Cap Strategy 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.