Correlation Between Guggenheim Active and Western Asset

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

Diversification Opportunities for Guggenheim Active and Western Asset

0.62

Correlation Coefficient

Guggenheim Active  Western Asset

Poor diversification

The 3 months correlation between Guggenheim and Western is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Active Allocation and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Guggenheim Active i.e., Guggenheim Active and Western Asset go up and down completely randomly.

Pair Corralation between Guggenheim Active and Western Asset

Considering the 90-day investment horizon Guggenheim Active is expected to generate 1.08 times less return on investment than Western Asset. In addition to that, Guggenheim Active is 1.36 times more volatile than Western Asset Diversified. It trades about 0.08 of its total potential returns per unit of risk. Western Asset Diversified is currently generating about 0.11 per unit of volatility. If you would invest  1,165  in Western Asset Diversified on September 12, 2024 and sell it today you would earn a total of  338.00  from holding Western Asset Diversified or generate 29.01% return on investment over 90 days.

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

Guggenheim Active Allocation  vs.  Western Asset Diversified

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.

Western Asset Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Diversified has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Guggenheim Active and Western Asset

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

The idea behind Guggenheim Active Allocation and Western Asset Diversified 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.