Correlation Between Guggenheim Active and Visa

Can any of the company-specific risk be diversified away by investing in both Guggenheim Active and Visa 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 Visa 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 Visa Class A, you can compare the effects of market volatilities on Guggenheim Active and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Active and Visa.

Diversification Opportunities for Guggenheim Active and Visa

-0.39

Correlation Coefficient

Guggenheim Active  Visa

Very good diversification

The 3 months correlation between Guggenheim and Visa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Active Allocation and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Guggenheim Active i.e., Guggenheim Active and Visa go up and down completely randomly.

Pair Corralation between Guggenheim Active and Visa

Considering the 90-day investment horizon Guggenheim Active is expected to generate 9.7 times less return on investment than Visa. But when comparing it to its historical volatility, Guggenheim Active Allocation is 1.56 times less risky than Visa. It trades about 0.02 of its potential returns per unit of risk. Visa Class A is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  27,809  in Visa Class A on September 5, 2024 and sell it today you would earn a total of  3,181  from holding Visa Class A or generate 11.44% 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.  Visa Class A

Guggenheim Active

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Active Allocation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Visa Class A

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guggenheim Active and Visa

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

The idea behind Guggenheim Active Allocation and Visa Class A 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.