Correlation Between Guggenheim Market and Guggenheim Large

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

By analyzing existing cross correlation between Guggenheim Market Neutral and Guggenheim Large Cap, you can compare the effects of market volatilities on Guggenheim Market and Guggenheim Large 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 Market with a short position of Guggenheim Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Market and Guggenheim Large.

Diversification Opportunities for Guggenheim Market and Guggenheim Large

0.76

Correlation Coefficient

Guggenheim Market  Guggenheim Large

Poor diversification

The 3 months correlation between Guggenheim and Guggenheim is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Market Neutral and Guggenheim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Large Cap and Guggenheim Market 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 Market Neutral are associated (or correlated) with Guggenheim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Large Cap has no effect on the direction of Guggenheim Market i.e., Guggenheim Market and Guggenheim Large go up and down completely randomly.

Pair Corralation between Guggenheim Market and Guggenheim Large

Assuming the 90 days horizon Guggenheim Market Neutral is expected to under-perform the Guggenheim Large. In addition to that, Guggenheim Market is 1.89 times more volatile than Guggenheim Large Cap. It trades about -0.23 of its total potential returns per unit of risk. Guggenheim Large Cap is currently generating about -0.33 per unit of volatility. If you would invest  4,914  in Guggenheim Large Cap on October 9, 2024 and sell it today you would lose (597.00) from holding Guggenheim Large Cap or give up 12.15% of portfolio value over 90 days.

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

Guggenheim Market Neutral  vs.  Guggenheim Large Cap

Guggenheim Market Neutral

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Market Neutral 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 basic 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.

Guggenheim Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Guggenheim Market and Guggenheim Large

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

The idea behind Guggenheim Market Neutral and Guggenheim Large Cap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.