Correlation Between Guggenheim Diversified and Gotham Hedged

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

By analyzing existing cross correlation between Guggenheim Diversified Income and Gotham Hedged E, you can compare the effects of market volatilities on Guggenheim Diversified and Gotham Hedged 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 Diversified with a short position of Gotham Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Diversified and Gotham Hedged.

Diversification Opportunities for Guggenheim Diversified and Gotham Hedged

0.0

Correlation Coefficient

Guggenheim Diversified  Gotham Hedged

Pay attention - limited upside

The 3 months correlation between Guggenheim and Gotham is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Diversified Income and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E and Guggenheim Diversified 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 Diversified Income are associated (or correlated) with Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of Guggenheim Diversified i.e., Guggenheim Diversified and Gotham Hedged go up and down completely randomly.

Pair Corralation between Guggenheim Diversified and Gotham Hedged

Assuming the 90 days horizon Guggenheim Diversified is expected to generate 1.58 times less return on investment than Gotham Hedged. But when comparing it to its historical volatility, Guggenheim Diversified Income is 3.18 times less risky than Gotham Hedged. It trades about 0.06 of its potential returns per unit of risk. Gotham Hedged E is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,012  in Gotham Hedged E on October 12, 2024 and sell it today you would earn a total of  130.00  from holding Gotham Hedged E or generate 12.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Guggenheim Diversified Income  vs.  Gotham Hedged E

Guggenheim Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gotham Hedged E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gotham Hedged E 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 fundamental 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.

Pair Trading with Guggenheim Diversified and Gotham Hedged

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

The idea behind Guggenheim Diversified Income and Gotham Hedged E 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.