Correlation Between Guggenheim Active and Nuveen Mortgage

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

By analyzing existing cross correlation between Guggenheim Active Allocation and Nuveen Mortgage Opportunity, you can compare the effects of market volatilities on Guggenheim Active and Nuveen Mortgage 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 Active with a short position of Nuveen Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Active and Nuveen Mortgage.

Diversification Opportunities for Guggenheim Active and Nuveen Mortgage

-0.2

Correlation Coefficient

Guggenheim Active  Nuveen Mortgage

Good diversification

The 3 months correlation between Guggenheim and Nuveen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Active Allocation and Nuveen Mortgage Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mortgage Oppo and Guggenheim Active 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 Active Allocation are associated (or correlated) with Nuveen Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mortgage Oppo has no effect on the direction of Guggenheim Active i.e., Guggenheim Active and Nuveen Mortgage go up and down completely randomly.

Pair Corralation between Guggenheim Active and Nuveen Mortgage

Considering the 90-day investment horizon Guggenheim Active is expected to generate 1.24 times less return on investment than Nuveen Mortgage. In addition to that, Guggenheim Active is 1.26 times more volatile than Nuveen Mortgage Opportunity. It trades about 0.08 of its total potential returns per unit of risk. Nuveen Mortgage Opportunity is currently generating about 0.12 per unit of volatility. If you would invest  1,402  in Nuveen Mortgage Opportunity on September 12, 2024 and sell it today you would earn a total of  479.00  from holding Nuveen Mortgage Opportunity or generate 34.17% return on investment over 90 days.

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

Guggenheim Active Allocation  vs.  Nuveen Mortgage Opportunity

Guggenheim Active

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Active Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guggenheim Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nuveen Mortgage Oppo

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mortgage Opportunity are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Nuveen Mortgage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guggenheim Active and Nuveen Mortgage

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

The idea behind Guggenheim Active Allocation and Nuveen Mortgage Opportunity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.