Correlation Between Guggenheim Macro and Brandes Emerging

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

By analyzing existing cross correlation between Guggenheim Macro Opportunities and Brandes Emerging Markets, you can compare the effects of market volatilities on Guggenheim Macro and Brandes Emerging 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 Macro with a short position of Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Macro and Brandes Emerging.

Diversification Opportunities for Guggenheim Macro and Brandes Emerging

0.22

Correlation Coefficient

Guggenheim Macro  Brandes Emerging

Modest diversification

The 3 months correlation between GUGGENHEIM and Brandes is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Macro Opportunities and Brandes Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Emerging Markets and Guggenheim Macro 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 Macro Opportunities are associated (or correlated) with Brandes Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Emerging Markets has no effect on the direction of Guggenheim Macro i.e., Guggenheim Macro and Brandes Emerging go up and down completely randomly.

Pair Corralation between Guggenheim Macro and Brandes Emerging

Assuming the 90 days horizon Guggenheim Macro is expected to generate 2.98 times less return on investment than Brandes Emerging. But when comparing it to its historical volatility, Guggenheim Macro Opportunities is 9.33 times less risky than Brandes Emerging. It trades about 0.14 of its potential returns per unit of risk. Brandes Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  838.00  in Brandes Emerging Markets on September 6, 2024 and sell it today you would earn a total of  22.00  from holding Brandes Emerging Markets or generate 2.63% return on investment over 90 days.

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

Guggenheim Macro Opportunities  vs.  Brandes Emerging Markets

Guggenheim Macro Opp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Macro Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Guggenheim Macro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brandes Emerging Markets

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Brandes Emerging 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 Macro and Brandes Emerging

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

The idea behind Guggenheim Macro Opportunities and Brandes Emerging Markets 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 Valuation module to check real value of public entities based on technical and fundamental data.